Safe and Sound

People's Bank of Seneca

Seneca, MO
4
Star Rating
People's Bank of Seneca is an FDIC-insured bank founded in 1996 and currently based in Seneca, MO. The bank holds equity of $15.9 million on $179.4 million in assets, according to December 31, 2017, regulatory filings.

Thanks to the efforts of 35 full-time employees in 4 offices in MO, the bank holds loans and leases worth $138.5 million, including $124.6 million worth of real estate loans. U.S. bank customers currently have $161.4 million in deposits with the bank.

Overall, Bankrate believes that, as of December 31, 2017, People's Bank of Seneca exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Here's a breakdown of how the bank did on the three important criteria Bankrate used to score U.S. banks.

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THE INSTITUTION'S SCORE

Capital Score

Capital is an important measurement of a bank's financial strength. It works as a cushion against losses and as protection for accountholders during times of financial trouble for the bank. When looking at safety and soundness, the higher the capital, the better.

On our test to measure the adequacy of a bank's capital, People's Bank of Seneca received a score of 8 out of a possible 30 points, coming in below the national average of 13.13.

A bank's Tier 1 capital ratio is a commonly used measure of this buffer. People's Bank of Seneca's Tier 1 capital ratio was 10.35 percent, higher than the 6 percent level regulators consider adequate, but below the national average of 25.65 percent. A higher capital ratio suggests the bank will be better able to weather financial difficulties.

Overall, People's Bank of Seneca held equity amounting to 8.88 percent of its assets, which was lower than the national average of 12.03 percent.

Asset Quality Score

Bankrate uses this test to determine the effect of troubled assets, such as unpaid mortgages, on the bank's loan loss reserves and overall capitalization.

A bank with a large number of these types of assets may eventually be required to use capital to absorb losses, decreasing its equity buffer. Many of those assets are also likely to be in non-accrual status and thus aren't earning interest for the bank, diminishing earnings and increasing the risk of a future failure.

On Bankrate's test of asset quality, People's Bank of Seneca scored 36 out of a possible 40 points, less than the national average of 37.49 points.

The percentage of problem assets a bank holds compared to its total assets is a handy indicator of asset quality.As of December 31, 2017, 0.86 percent of People's Bank of Seneca's loans were noncurrent, meaning they were more than 90 days past due or were in non-accrual status. That's below the national average of 1.01 percent.

Banks maintain a reserve to deal with problem assets known as an "allowance for loan and lease losses." Comparing the reserve's size to the total amount of problematic loans can be a handy indicator when evaluating a bank's ability to manage problem assets. Unfortunately, the FDIC did not provide information on People's Bank of Seneca's loan loss allowance in its most recent filings.

Earnings score

A bank's profitability affects its long-term survivability. A bank can retain its earnings, increasing its capital buffer, or use them to address problematic loans, likely making the bank better able to withstand financial trouble. Losses, on the other hand, reduce a bank's ability to do those things.

People's Bank of Seneca scored 20 out of a possible 30 on Bankrate's earnings test, beating out the national average of 15.12.

Return on equity, calculated by dividing net income (essentially, profit) by total equity, is one widely used measure of a bank's earnings. People's Bank of Seneca's most recent annualized quarterly return on equity was 12.27 percent, above the national average of 8.10 percent.

For the twelve months ended December 31, 2017, the bank earned net income of $1.8 million on total equity of $15.9 million. The bank had an annualized return on average assets, or ROA, of 1.05 percent, above the 1 percent deemed satisfactory in accordance with industry standards, and above the average for U.S. banks of 1.00 percent.

WHAT IS SAFE & SOUND?

Bankrate.com's Safe & Sound Ratings provide a star rating system to evaluate the current financial status of financial institutions. The information gathered about banks, credit unions and thrifts is updated as set forth in the Terms of Use of Safe & Sound Ratings and Reports. The Safe & Sound Ratings information is grouped by categories of banks, thrifts and credit unions.

Scoring methodology

Bankrate.com evaluates the financial condition of institutions and assigns a one- to five-star rating for each with five stars representing the highest rating. Institutions with satisfactory performance will generally receive a rating of three or more stars. The majority of institutions fall into the three- to four-star range. An institution with an "NR" rating may be too new to rate or may have limited the publicly available information in their regulatory filings. The "NR" is not an indication of financial strength or weakness. The Safe & Sound rating is believed to be reliable, but the information is not guaranteed. In addition, events since the information was collected may have altered the institution's financial condition.