Safe and Sound

Summit Bank of Kansas City

Lees Summit, MO
4
Star Rating
Summit Bank of Kansas City is an FDIC-insured bank founded in 1902 and currently based in Lees Summit, MO. The bank holds equity of $5.6 million on $47.3 million in assets, according to December 31, 2017, regulatory filings.

Thanks to the efforts of 15 full-time employees, the bank has amassed loans and leases worth $40.9 million, including $29.5 million worth of real estate loans. The bank currently holds $41.6 million in deposits from U.S. customers.

Overall, Bankrate believes that, as of December 31, 2017, Summit Bank of Kansas City exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Keep reading for an analysis of how the bank fared on the three important criteria Bankrate used to grade U.S. banks.

WHAT IS
SAFE AND SOUND?

Find out

THE INSTITUTION'S SCORE

Capital Score

Capital acts as a bulwark against losses and as protection for account holders when a bank is struggling financially. It follows then that when it comes to measuring an a bank's financial stability, capital is valuable. When looking at safety and soundness, the higher the capital, the better.

On our test to measure capital adequacy, Summit Bank of Kansas City received a score of 12 out of a possible 30 points, falling short of the national average of 13.13.

One way to measure this buffer is looking at a bank's Tier 1 capital ratio. Summit Bank of Kansas City's Tier 1 capital ratio was 13.18 percent, exceeding the 6 percent level regulators consider adequate, but lower than the national average of 25.65 percent. A higher capital ratio suggests the bank will be better able to weather economic downturns.

Overall, Summit Bank of Kansas City held equity amounting to 11.83 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.

A bank with large numbers of these kinds of assets may eventually have to use capital to cover losses, decreasing its buffer of equity. It also means that there are likely to be many assets that are in non-accrual status and no longer earning money, diminishing earnings and elevating the chances of a failure in the future.

On Bankrate's test of asset quality, Summit Bank of Kansas City scored 40 out of a possible 40 points, beating out the national average of 37.49 points.

A useful indicator of asset quality is the percentage of problem assets a bank holds compared to its total assets. As of December 31, 2017, 0.80 percent of Summit Bank of Kansas City'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." How large that reserve is can be a widely used indicator when evaluating a bank's ability to manage troubled assets, especially when compared to the total amount of problem loans. Unfortunately, the FDIC did not provide information on Summit Bank of Kansas City's loan loss allowance in its most recent filings.

Earnings score

How profitable a bank is has an effect on its safety and soundness. A bank can retain its earnings, increasing its capital buffer, or use them to deal with problematic loans, likely making the bank better able to withstand financial shocks. Banks that are losing money, however, are less able to do those things.

Summit Bank of Kansas City scored 10 out of a possible 30 on Bankrate's earnings test, falling short of the national average of 15.12.

Return on equity, calculated by dividing net income (profit, essentially) by the total amount of equity, is one widely used measure of a bank's earnings. The most recent annualized quarterly return on equity for Summit Bank of Kansas City was 4.93 percent, below the national average of 8.10 percent.

For the twelve months ended December 31, 2017, the bank reported net income of $268,000 on total equity of $5.6 million. The bank experienced an annualized return on average assets, or ROA, of 0.62 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.