Safe and Sound

The Kearny County Bank

Lakin, KS
5
Star Rating
The Kearny County Bank is an FDIC-insured bank started in 1888 and currently headquartered in Lakin, KS. The bank holds equity of $33.9 million on $203.0 million in assets, according to December 31, 2017, regulatory filings.

With 38 full-time employees in 2 offices in KS, the bank currently holds loans and leases worth $144.7 million, including real estate loans of $84.7 million. U.S. bank customers currently have $167.7 million in deposits with the bank.

Overall, Bankrate believes that, as of December 31, 2017, The Kearny County Bank exhibited a superior condition, earning a full 5 stars for safety and soundness. Here's a look at how the bank fared on the three important criteria Bankrate used to grade U.S. banks on safety and soundness.

WHAT IS
SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

Capital is a useful measurement of a bank's financial fortitude. It works as a cushion against losses and provides protection for depositors when a bank is struggling financially. When looking at safety and soundness, more capital is preferred.

The Kearny County Bank beat out the national average of 13.13 points on our test to measure the adequacy of a bank's capital, receiving a score of 24 out of a possible 30 points.

One essential measure of this buffer is a bank's Tier 1 capital ratio. The Kearny County Bank's Tier 1 capital ratio was 21.18 percent, higher than the 6 percent level considered adequate by regulators, 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 financial challenges.

Overall, The Kearny County Bank held equity amounting to 16.71 percent of its assets, which exceeded the national average of 12.03 percent.

Asset Quality Score

This test's purpose is to estimate how the bank's capitalization and allocated loan loss reserves could be affected by troubled assets, such as past-due loans.

A bank with extensive holdings of these kinds of assets could eventually have to use capital to cover losses, reducing its cushion of equity. Many of those assets are also likely to be in non-accrual status and thus aren't earning interest for the bank, pushing down earnings and increasing the chances of a future failure.

On Bankrate's test of asset quality, The Kearny County Bank scored 40 out of a possible 40 points, beating out the national average of 37.49 points.

The percentage of problem assets a bank holds compared to its total assets is a useful indicator of asset quality.As of December 31, 2017, 0.61 percent of The Kearny County Bank's loans were noncurrent -- in other words, 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 troubled 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 problem assets, especially when compared to the total amount of problematic loans. Unfortunately, the FDIC did not provide information on The Kearny County Bank's loan loss allowance in its most recent filings.

Earnings score

A bank's profitability affects its long-term survivability. Earnings may be retained by the bank, giving a boost to its capital buffer, or be used to deal with problematic loans, potentially making the bank better able to withstand economic shocks. However, banks that are losing money are less able to do those things.

On Bankrate's earnings test, The Kearny County Bank scored 20 out of a possible 30, beating the national average of 15.12.

One widely used measure of a bank's earnings is return on equity, calculated by dividing net income (essentially profit) by total equity. The most recent annualized quarterly return on equity for The Kearny County Bank was 10.46 percent, above the national average of 8.10 percent.

The bank reported net income of $3.6 million on total equity of $33.9 million for the twelve months ended December 31, 2017. The bank reported an annualized return on average assets, or ROA, of 1.78 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.