Safe and Sound

Premier Bank

Maplewood, MN
4
Star Rating
Premier Bank is a Maplewood, MN-based, FDIC-insured bank that opened its doors in 1974. Regulatory filings show the bank having equity of $72.6 million on $723.9 million in assets, as of December 31, 2017.

With 92 full-time employees in 8 offices in MN, the bank currently holds loans and leases worth $530.0 million, including real estate loans of $459.3 million. U.S. bank customers currently have $649.4 million in deposits with the bank.

Overall, Bankrate believes that, as of December 31, 2017, Premier Bank 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 major criteria Bankrate used to evaluate American banks.

WHAT IS
SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

Capital works as a buffer against losses and as protection for account holders when a bank is experiencing financial instability. It follows then that a bank's level of capital is an important measurement of an institution's financial strength. When it comes to safety and soundness, the higher the capital, the better.

On our test to measure the adequacy of a bank's capital, Premier Bank received a score of 12 out of a possible 30 points, less than the national average of 13.13.

One essential measure of this buffer is a bank's Tier 1 capital ratio. Premier Bank's Tier 1 capital ratio was 12.45 percent, above 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 economic challenges.

Overall, Premier Bank held equity amounting to 10.02 percent of its assets, which was lower than the national average of 12.03 percent.

Asset Quality Score

This test is intended to try to understand how the bank's reserves set aside to cover loan losses, as well as overall capitalization, could be affected by troubled assets, such as past-due mortgages.

A bank with large numbers of these kinds of assets may eventually be required to use capital to cover losses, reducing its cushion of equity. Many of those assets are also likely to be in non-accrual status and no longer earning money, reducing earnings and increasing the risk of a future failure.

Premier Bank fell below the national average of 37.49 on Bankrate's test of asset quality, racking up 32 out of a possible 40 points .

The percentage of problem assets a bank holds compared to its total assets is a helpful indicator of asset quality.As of December 31, 2017, 0.74 percent of Premier Bank'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 keep a reserve to deal with problem 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 troubled assets, especially when compared to the total amount of problematic loans. Unfortunately, the FDIC did not provide information on Premier Bank's loan loss allowance in its most recent filings.

Earnings score

A bank's profitability has an effect on its long-term survivability. A bank can retain its earnings, expanding its capital cushion, or put them to work addressing problematic loans, likely making the bank more resilient in tough times. Conversely, losses lessen a bank's ability to do those things.

Premier Bank scored 20 out of a possible 30 on Bankrate's test of earnings, better than the national average of 15.12.

Return on equity, calculated by dividing net income (essentially, profit) by total equity, is one important way to measure a bank's earnings. The most recent annualized quarterly return on equity for Premier Bank was 10.58 percent, above the national average of 8.10 percent.

The bank earned net income of $7.4 million on total equity of $72.6 million for the twelve months ended December 31, 2017. The bank reported 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.