Safe and Sound

The Farmers State Bank and Trust Company

Jacksonville, IL
2
Star Rating
Founded in 1910, The Farmers State Bank and Trust Company is an FDIC-insured bank based in Jacksonville, IL. As of December 31, 2017, the bank held equity of $22.3 million on assets of $208.6 million.

Thanks to the work of 56 full-time employees in 2 offices in IL, the bank holds loans and leases worth $107.2 million, $77.1 million of which are for real estate. U.S. bank customers currently have $179.1 million in deposits with the bank.

Overall, Bankrate believes that, as of December 31, 2017, The Farmers State Bank and Trust Company exhibited a below-average condition, earning 2 out of 5 stars for safety and soundness. Here's a look at how the bank did on the three major criteria Bankrate used to evaluate American banks.

WHAT IS
SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

Capital works as a cushion against losses and affords protection for depositors during periods of financial trouble for the bank. Therefore, when it comes to measuring an a bank's financial fortitude, capital is crucial. When looking at safety and soundness, the more capital, the better.

The Farmers State Bank and Trust Company received a score of 12 out of a possible 30 points on our test to measure capital adequacy, less than the national average of 13.13.

A bank's Tier 1 capital ratio is a widely used measure of this buffer. The Farmers State Bank and Trust Company's Tier 1 capital ratio was 17.12 percent, higher than the 6 percent level regulators consider adequate, but under the national average of 25.65 percent. The higher the capital ratio, the better the bank will be able to weather financial difficulties.

Overall, The Farmers State Bank and Trust Company held equity amounting to 10.71 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 troubled assets, such as past-due mortgages.

Having lots of these types of assets could eventually require a bank to use capital to absorb losses, cutting down on its buffer of equity. Many of those assets are also likely to be in non-accrual status and thus aren't earning money, diminishing earnings and increasing the chances of a failure in the future.

On Bankrate's test of asset quality, The Farmers State Bank and Trust Company scored 32 out of a possible 40 points, falling short of the national average of 37.49 points.

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, 4.05 percent of The Farmers State Bank and Trust Company'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 handle problem assets known as an "allowance for loan and lease losses." That reserve's size can be a useful 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 The Farmers State Bank and Trust Company's loan loss allowance in its most recent filings.

Earnings score

How profitable a bank is affects its safety and soundness. A bank can retain its earnings, boosting its capital cushion, or use them to address problematic loans, potentially making the bank more resilient in times of trouble. Obviously, banks that are losing money have less ability to do those things.

The Farmers State Bank and Trust Company fell behind the national average on Bankrate's earnings test, achieving a score of 0 out of a possible 30.

Return on equity, calculated by dividing net income (profit, essentially) by total equity, is one widely used measure of a bank's earnings. The most recent annualized quarterly return on equity for The Farmers State Bank and Trust Company was -3.57 percent, below the national average of 8.10 percent.

For the twelve months ended December 31, 2017, the bank recorded net income of $-830,000 on total equity of $22.3 million. The bank reported an annualized return on average assets, or ROA, of -0.40 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.