Safe and Sound

Southwest Missouri Bank

Carthage, MO
4
Star Rating
Started in 1979, Southwest Missouri Bank is an FDIC-insured bank based in Carthage, MO. Regulatory filings show the bank having equity of $64.1 million on assets of $719.3 million, as of December 31, 2017.

Thanks to the efforts of 194 full-time employees in 11 offices in MO, the bank currently holds loans and leases worth $410.1 million, $298.1 million of which are for real estate. The bank currently holds $622.9 million in deposits from U.S. customers.

Overall, Bankrate believes that, as of December 31, 2017, Southwest Missouri Bank 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 major criteria Bankrate used to score American banks.

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THE INSTITUTION'S SCORE

Capital Score

Capital acts as a buffer against losses and provides protection for account holders during times of economic trouble for the bank. Therefore, a bank's level of capital is a valuable measurement of a bank's financial strength. From a safety and soundness perspective, the more capital, the better.

On our test to measure capital adequacy, Southwest Missouri Bank received a score of 8 out of a possible 30 points, below the national average of 13.13.

A bank's Tier 1 capital ratio is a commonly used measure of this buffer. Southwest Missouri Bank's Tier 1 capital ratio was 15.50 percent, higher than the 6 percent level regulators consider adequate, but less than the national average of 25.65 percent. The higher the capital ratio, the better the bank will be able to weather economic headwinds.

Overall, Southwest Missouri Bank held equity amounting to 8.92 percent of its assets, which was lower than the national average of 12.03 percent.

Asset Quality Score

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

Having large numbers of these types of assets may eventually require a bank to use capital to absorb losses, cutting down on its equity buffer. Many of those assets are also likely to be in non-accrual status and no longer earning interest for the bank, diminishing earnings and increasing the chances of a future failure.

Southwest Missouri Bank scored 40 out of a possible 40 points on Bankrate's asset quality test, exceeding the national average of 37.49.

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, 0.38 percent of Southwest Missouri 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 maintain a reserve to handle troubled assets known as an "allowance for loan and lease losses." That reserve's size can be a widely used 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 Southwest Missouri Bank's loan loss allowance in its most recent filings.

Earnings score

A bank's profitability affects its long-term survivability. Earnings may be retained by the bank, expanding its capital buffer, or be used to deal with problematic loans, likely making the bank more resilient in times of trouble. Obviously, banks that are losing money are less able to do those things.

Southwest Missouri Bank did below-average on Bankrate's earnings test, achieving a score of 10 out of a possible 30.

One widely used measure of a bank's earnings is return on equity, or net income (essentially profit) divided by total equity. Southwest Missouri Bank's most recent annualized quarterly return on equity was 4.70 percent, below the national average of 8.10 percent.

For the twelve months ended December 31, 2017, the bank recorded net income of $3.0 million on total equity of $64.1 million. The bank reported an annualized return on average assets, or ROA, of 0.43 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.