Safe and Sound

Peoples Savings Bank of Rhineland

Rhineland, MO
4
Star Rating
Peoples Savings Bank of Rhineland is an FDIC-insured bank founded in 1935 and currently headquartered in Rhineland, MO. As of December 31, 2017, the bank had equity of $21.6 million on $257.4 million in assets.

U.S. bank customers have $234.3 million on deposit at 7 offices in MO run by 65 full-time employees. With that footprint, the bank holds loans and leases worth $195.0 million, $158.4 million of which are for real estate.

Overall, Bankrate believes that, as of December 31, 2017, Peoples Savings Bank of Rhineland exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Keep reading for an analysis of how the bank did on the three major criteria Bankrate used to score American banks.

WHAT IS
SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

Capital works as a bulwark against losses and affords protection for account holders when a bank is experiencing economic instability. Therefore, a bank's level of capital is an important measurement of a bank's financial fortitude. When it comes to safety and soundness, the higher the capital, the better.

Peoples Savings Bank of Rhineland fell short of the national average of 13.13 on our test to measure the adequacy of a bank's capital, racking up 8 out of a possible 30 points.

One way to measure this buffer is looking at a bank's Tier 1 capital ratio. Peoples Savings Bank of Rhineland's Tier 1 capital ratio was 10.82 percent, higher than the 6 percent level regulators consider adequate, but lower than the national average of 25.65 percent. The higher the capital ratio, the better the bank will be able to weather financial difficulties.

Overall, Peoples Savings Bank of Rhineland held equity amounting to 8.38 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 impact of problem assets, such as unpaid mortgages, on the bank's capitalization and allocated loan loss reserves.

Having extensive holdings of these types of assets means a bank could have to use capital to absorb losses, diminishing its equity cushion. It also means that there are likely to be many assets that are in non-accrual status and thus aren't earning interest for the bank, resulting in depressed earnings and potentially more risk of a future failure.

Peoples Savings Bank of Rhineland scored above the national average of 37.49 on Bankrate's test of asset quality, racking up 40 out of a possible 40 points .

The percentage of problem assets a bank holds compared to its total assets is a useful indicator of asset quality.As of December 31, 2017, 0.53 percent of Peoples Savings Bank of Rhineland'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." The size of that reserve can be a useful indicator when evaluating a bank's ability to manage problem assets, especially when compared to the total amount of problematic loans. Unfortunately, the FDIC did not provide information on Peoples Savings Bank of Rhineland's loan loss allowance in its most recent filings.

Earnings score

How profitable a bank is affects its long-term survivability. Earnings can be retained by the bank, increasing its capital cushion, or be used to address problematic loans, potentially making the bank better able to withstand financial trouble. However, banks that are losing money have less ability to do those things.

On Bankrate's test of earnings, Peoples Savings Bank of Rhineland scored 18 out of a possible 30, exceeding the national average of 15.12.

One key way to measure a bank's earnings is return on equity, or net income (essentially profit) divided by the total amount of equity. Peoples Savings Bank of Rhineland's most recent annualized quarterly return on equity was 8.19 percent, above the national average of 8.10 percent.

The bank earned net income of $1.7 million on total equity of $21.6 million for the twelve months ended December 31, 2017. The bank reported an annualized return on average assets, or ROA, of 0.72 percent, below the 1 percent deemed satisfactory in accordance with industry standards and below 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.