Safe and Sound

The Bank of Whitewater

Whitewater, KS
5
Star Rating
The Bank of Whitewater is an FDIC-insured bank started in 1891 and currently based in Whitewater, KS. As of June 30, 2017, the bank held equity of $1.9 million on assets of $20.9 million.

Thanks to the work of 7 full-time employees, the bank currently holds loans and leases worth $10.4 million, $4.1 million of which are for real estate. The bank currently holds $19.0 million in deposits from U.S. customers.

Overall, Bankrate believes that, as of June 30, 2017, The Bank of Whitewater exhibited a superior condition, earning a full 5 stars for safety and soundness. Keep reading for an analysis of how the bank faired on the three major criteria Bankrate used to grade American banks on safety and soundness.

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THE INSTITUTION'S SCORE

Capital Score

Capital works as a bulwark against losses and as protection for depositors when a bank is struggling financially. Therefore, a bank's level of capital is a crucial measurement of a bank's financial fortitude. 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, The Bank of Whitewater received a score of 10 out of a possible 30 points, below the national average of 13.38.

One way to measure this buffer is looking at a bank's Tier 1 capital ratio. The Bank of Whitewater's Tier 1 capital ratio was 16.55 percent, above the 6 percent level regulators consider adequate, but less than the national average of 25.16 percent. A higher capital ratio means the bank will be better able to weather economic challenges.

Overall, The Bank of Whitewater held equity amounting to 9.03 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 loans.

Having large numbers of these types of assets could eventually require a bank to use capital to cover losses, diminishing its equity buffer. 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 increasing the chances of a failure in the future.

The Bank of Whitewater scored 40 out of a possible 40 points on Bankrate's asset quality test, above the national average of 37.62.

The percentage of problem assets a bank holds compared to its total assets is a helpful indicator of asset quality.As of June 30, 2017, 0.28 percent of The Bank of Whitewater'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 1.04 percent.

Banks maintain a reserve known as an "allowance for loan and lease losses" to deal with troubled assets . Comparing the the size of that reserve to the total amount of at-risk loans can be a widely used indicator when evaluating a bank's ability to manage problem assets. Unfortunately, the FDIC did not provide information on The Bank of Whitewater's loan loss allowance in its most recent filings.

Earnings score

A bank's earnings performance affects its safety and soundness. A bank can retain its earnings, increasing its capital buffer, or use them to deal with problematic loans, potentially making the bank better able to withstand economic shocks. Losses, on the other hand, reduce a bank's ability to do those things.

The Bank of Whitewater scored 22 out of a possible 30 on Bankrate's earnings test, beating out the national average of 16.52.

Return on equity, calculated by dividing net income (essentially, profit) by total equity, is one key measure of a bank's earnings. The Bank of Whitewater's most recent annualized quarterly return on equity was 12.66 percent, above the national average of 9.28 percent.

The bank earned net income of $120,000 on total equity of $1.9 million for the twelve months ended June 30, 2017. The bank experienced an annualized return on average assets, or ROA, of 1.15 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.