Safe and Sound

Peoples State Bank

Mc Donald, KS
5
Star Rating
Founded in 1930, Peoples State Bank is an FDIC-insured bank headquartered in Mc Donald, KS. The bank has equity of $11.2 million on $122,407,000 in assets, according to June 30, 2017, regulatory filings.

With 29 full-time employees in 5 offices in KS, the bank has amassed loans and leases worth $104.8 million, including real estate loans of $56.7 million. U.S. bank customers currently have $99.7 million in deposits with the bank.

Overall, Bankrate believes that, as of June 30, 2017, Peoples State Bank exhibited a superior condition, earning a full 5 stars for safety and soundness. Here's a breakdown of how the bank did on the three important criteria Bankrate used to evaluate U.S. banks on safety and soundness.

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 accountholders when a bank is experiencing economic trouble. Therefore, a bank's level of capital is an important measurement of a bank's financial resilience. When looking at safety and soundness, the more capital, the better.
Peoples State Bank received a score of 10 out of a possible 30 points on our test to measure capital adequacy, failing to reach the national average of 13.38.

One important measure of this buffer is a bank's Tier 1 capital ratio. Peoples State Bank's Tier 1 capital ratio was 10.61 percent, above the 6 percent level regulators consider adequate, but lower than the national average of 25.16 percent. A higher capital ratio means the bank will be better able to stand up to economic challenges.

Overall, Peoples State Bank held equity amounting to 9.12 percent of its assets, which was lower than the national average of 12.10 percent.

Asset Quality Score

This test's purpose is to estimate how the bank's loan loss reserves and overall capitalization could be affected by problem assets, such as past-due mortgages.

Having lots of these types of assets suggests a bank could eventually have to use capital to absorb losses, decreasing 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, reducing earnings and elevating the risk of a failure in the future.

Peoples State Bank scored 32 out of a possible 40 points on Bankrate's test of asset quality, failing to reach the national average of 37.62.

The percentage of problem assets a bank holds compared to its total assets is a useful indicator of asset quality.As of June 30, 2017, 1.63 percent of Peoples State Bank's loans were noncurrent -- in other words, they were more than 90 days past due or were in non-accrual status. That's above the national average of 1.04 percent.

Banks maintain a reserve to handle troubled assets known as an "allowance for loan and lease losses." How large that reserve is can be a handy indicator when evaluating a bank's ability to manage problem assets, especially when compared to the total amount of at-risk loans. Unfortunately, the FDIC did not provide information on Peoples State Bank's loan loss allowance in its most recent filings.

Earnings score

A bank's earnings performance affects its long-term survivability. A bank can retain its earnings, increasing its capital cushion, or use them to address problematic loans, potentially making the bank more resilient in tough times. However, banks that are losing money have less ability to do those things.

On Bankrate's test of earnings, Peoples State Bank scored 30 out of a possible 30, exceeding the national average of 16.52.

Return on equity, calculated by dividing net income (profit, essentially) by total equity, is one key measure of a bank's earnings. The most recent annualized quarterly return on equity for Peoples State Bank was 22.81 percent, above the national average of 9.28 percent.

The bank reported net income of $1.3 million on total equity of $11.2 million for the twelve months ended June 30, 2017. The bank experienced an annualized return on average assets, or ROA, of 2.12 percent, above the 1 percent deemed satisfactory in accordance with industry standards, and above the average for U.S. banks of 1.14 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.