Safe and Sound

The Farmers State Bank of Bucklin, Kansas

Bucklin, KS
4
Star Rating
The Farmers State Bank of Bucklin, Kansas is an FDIC-insured bank started in 1909 and currently headquartered in Bucklin, KS. Regulatory filings show the bank having equity of $5.0 million on $43.6 million in assets, as of December 31, 2017.

Thanks to the efforts of 10 full-time employees, the bank has amassed loans and leases worth $22.1 million, including $4.1 million worth of real estate loans. U.S. bank customers currently have $38.5 million in deposits with the bank.

Overall, Bankrate believes that, as of December 31, 2017, The Farmers State Bank of Bucklin, Kansas exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Keep reading for a breakdown of how the bank fared on the three major criteria Bankrate used to grade U.S. banks.

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THE INSTITUTION'S SCORE

Capital Score

When it comes to measuring an an institution's financial fortitude, capital is valuable. It works as a cushion against losses and as protection for depositors when a bank is struggling financially. When looking at safety and soundness, more capital is better.

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

A bank's Tier 1 capital ratio is an essential measure of this buffer. The Farmers State Bank of Bucklin, Kansas's Tier 1 capital ratio was 14.74 percent, higher than 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 weather financial difficulties.

Overall, The Farmers State Bank of Bucklin, Kansas held equity amounting to 11.40 percent of its assets, which was lower than the national average of 12.03 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 a large number of these types of assets could eventually force a bank to use capital to absorb losses, decreasing its equity cushion. Many of those assets are also likely to be in non-accrual status and no longer earning money, resulting in lower earnings and potentially more risk of a future failure.

The Farmers State Bank of Bucklin, Kansas scored 40 out of a possible 40 points on Bankrate's asset quality test, exceeding the national average of 37.49.

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, 0.23 percent of The Farmers State Bank of Bucklin, Kansas'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 keep a reserve to deal with problem 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 problem loans. Unfortunately, the FDIC did not provide information on The Farmers State Bank of Bucklin, Kansas'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, boosting its capital buffer, or use them to deal with problematic loans, likely making the bank better prepared to withstand financial trouble. Banks that are losing money, however, are less able to do those things.

The Farmers State Bank of Bucklin, Kansas received below-average marks on Bankrate's test of earnings, achieving a score of 12 out of a possible 30.

One important measure of a bank's earnings is return on equity, calculated by dividing net income (profit, essentially) by total equity. The most recent annualized quarterly return on equity for The Farmers State Bank of Bucklin, Kansas was 5.16 percent, below the national average of 8.10 percent.

The bank reported net income of $251,000 on total equity of $5.0 million for the twelve months ended December 31, 2017. The bank had an annualized return on average assets, or ROA, of 0.56 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.