Safe and Sound

The Citizens State Bank of Cheney, Kansas

Cheney, KS
5
Star Rating
The Citizens State Bank of Cheney, Kansas is a Cheney, KS-based, FDIC-insured bank dating back to 1884. As of December 31, 2017, the bank had equity of $6.7 million on assets of $57.7 million.

With 14 full-time employees, the bank currently holds loans and leases worth $36.1 million, including real estate loans of $17.9 million. U.S. bank customers currently have $50.9 million in deposits with the bank.

Overall, Bankrate believes that, as of December 31, 2017, The Citizens State Bank of Cheney, Kansas exhibited a superior condition, earning a full 5 stars for safety and soundness. Keep reading for an analysis of how the bank did on the three key criteria Bankrate used to score American banks on safety and soundness.

WHAT IS
SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

Capital works as a bulwark against losses and provides protection for account holders during times of economic trouble for the bank. Therefore, a bank's level of capital is an essential measurement of a bank's financial resilience. When it comes to safety and soundness, the higher the capital, the better.

The Citizens State Bank of Cheney, Kansas scored 14 out of a possible 30 points on our test to measure capital adequacy, above the national average of 13.13.

One important measure of this buffer is a bank's Tier 1 capital ratio. The Citizens State Bank of Cheney, Kansas's Tier 1 capital ratio was 11.60 percent, above the 6 percent level regulators consider adequate, but lower than the national average of 25.65 percent. The higher the capital ratio, the better the bank will be able to stand up to economic challenges.

Overall, The Citizens State Bank of Cheney, Kansas held equity amounting to 11.68 percent of its assets, which was lower than the national average of 12.03 percent.

Asset Quality Score

In this test, Bankrate tries to determine the effect of problem assets, such as past-due loans, on the bank's capitalization and allocated loan loss reserves.

A bank with lots of these types of assets could eventually have to use capital to absorb losses, shrinking its cushion of equity. It also means that there are likely to be many assets that are in non-accrual status and no longer earning interest for the bank, resulting in diminished earnings and potentially more risk of a failure in the future.

The Citizens State Bank of Cheney, Kansas scored 36 out of a possible 40 points on Bankrate's asset quality test, coming in below the national average of 37.49.

A helpful indicator of asset quality is the percentage of problem assets a bank holds compared to its total assets. As of December 31, 2017, 1.48 percent of The Citizens State Bank of Cheney, Kansas's loans were noncurrent -- in other words, 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 keep a reserve to deal with troubled assets known as an "allowance for loan and lease losses." Comparing how large that reserve is to the total amount of problem loans can be a widely used indicator when evaluating a bank's ability to manage troubled assets. Unfortunately, the FDIC did not provide information on The Citizens State Bank of Cheney, Kansas's loan loss allowance in its most recent filings.

Earnings score

How profitable a bank is 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. Losses, on the other hand, lessen a bank's ability to do those things.

The Citizens State Bank of Cheney, Kansas exceeded the national average on Bankrate's test of earnings, achieving a score of 24 out of a possible 30.

One key way to measure a bank's earnings is return on equity, calculated by dividing net income (essentially profit) by total equity. The Citizens State Bank of Cheney, Kansas's most recent annualized quarterly return on equity was 14.61 percent, above the national average of 8.10 percent.

The bank reported net income of $988,000 on total equity of $6.7 million for the twelve months ended December 31, 2017. The bank reported an annualized return on average assets, or ROA, of 1.68 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.