Safe and Sound

PremierBank

Fort Atkinson, WI
4
Star Rating
PremierBank is a Fort Atkinson, WI-based, FDIC-insured bank dating back to 1863. As of December 31, 2017, the bank held equity of $50.5 million on assets of $423.8 million.

With 93 full-time employees in 12 offices in WI, the bank currently holds loans and leases worth $218.4 million, including real estate loans of $179.6 million. U.S. bank customers currently have $336.1 million in deposits with the bank.

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

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SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

When it comes to measuring an a bank's financial resilience, capital is valuable. It acts as a cushion against losses and provides protection for depositors when a bank is struggling financially. From a safety and soundness perspective, more capital is better.

PremierBank finished below the national average of 13.13 on our test to measure the adequacy of a bank's capital, achieving a score of 12 out of a possible 30 points.

One way to measure this buffer is looking at a bank's Tier 1 capital ratio. PremierBank's Tier 1 capital ratio was 16.42 percent, exceeding the 6 percent level considered adequate by regulators, but below the national average of 25.65 percent. A higher capital ratio means the bank will be better able to weather economic headwinds.

Overall, PremierBank held equity amounting to 11.91 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 capitalization and allocated loan loss reserves could be affected by problem assets, such as past-due mortgages.

Having a large number of these types of assets could eventually require a bank to use capital to absorb losses, diminishing its equity buffer. Many of those assets are also likely to be in non-accrual status and no longer earning money, pushing down earnings and increasing the risk of a future failure.

PremierBank scored 36 out of a possible 40 points on Bankrate's test of asset quality, coming in below the national average of 37.49.

A widely used indicator of asset quality is the percentage of problem assets a bank holds compared to its total assets. As of December 31, 2017, 1.59 percent of PremierBank's loans were noncurrent, meaning they were more than 90 days past due or were in non-accrual status. That's above the national average of 1.01 percent.

Banks maintain a reserve known as an "allowance for loan and lease losses" to deal with troubled assets . Comparing how large that reserve is to the total amount of problematic loans can be a helpful indicator when evaluating a bank's ability to manage troubled assets. Unfortunately, the FDIC did not provide information on PremierBank's loan loss allowance in its most recent filings.

Earnings score

A bank's ability to earn money affects its long-term survivability. A bank can retain its earnings, giving a boost to its capital buffer, or put them to work addressing problematic loans, potentially making the bank better able to withstand financial trouble. Banks that are losing money, however, have less ability to do those things.

PremierBank scored 8 out of a possible 30 on Bankrate's earnings test, coming in below the national average of 15.12.

One key measure of a bank's earnings is return on equity, or net income (profit, essentially) divided by total equity. The most recent annualized quarterly return on equity for PremierBank was 4.31 percent, below the national average of 8.10 percent.

The bank earned net income of $2.0 million on total equity of $50.5 million for the twelve months ended December 31, 2017. The bank had an annualized return on average assets, or ROA, of 0.56 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.