Safe and Sound

The State Bank of Blue Rapids

Blue Rapids, KS
4
Star Rating
Blue Rapids, KS-based The State Bank of Blue Rapids is an FDIC-insured bank founded in 1871. Regulatory filings show the bank having equity of $5.1 million on assets of $45.6 million, as of June 30, 2017.

Thanks to the work of 8 full-time employees, the bank has amassed loans and leases worth $24.3 million, including real estate loans of $13.1 million. U.S. bank customers currently have $40.2 million in deposits with the bank.

Overall, Bankrate believes that, as of June 30, 2017, The State Bank of Blue Rapids exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Keep reading for a breakdown of how the bank did on the three major criteria Bankrate used to grade American banks.

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THE INSTITUTION'S SCORE

Capital Score

Capital is a key measurement of an institution's financial resilience. It works as a bulwark against losses and provides protection for depositors during times of economic instability for the bank. When looking at safety and soundness, more capital is better.
The State Bank of Blue Rapids racked up 14 out of a possible 30 points on our test to measure the adequacy of a bank's capital, beating the national average of 13.38.

One way to measure this buffer is looking at a bank's Tier 1 capital ratio. The State Bank of Blue Rapids's Tier 1 capital ratio was 20.95 percent, higher than the 6 percent level considered adequate by regulators, but under the national average of 25.16 percent. The higher the capital ratio, the better the bank will be able to stand up to financial challenges.

Overall, The State Bank of Blue Rapids held equity amounting to 11.14 percent of its assets, which was lower than the national average of 12.10 percent.

Asset Quality Score

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

Having a large number of these kinds of assets suggests a bank could eventually have to use capital to absorb losses, decreasing its cushion of equity. It also means that there are likely to be many assets that are in non-accrual status and thus aren't earning money, reducing earnings and elevating the risk of a failure in the future.

On Bankrate's asset quality test, The State Bank of Blue Rapids scored 40 out of a possible 40 points, above the national average of 37.62 points.

A useful indicator of asset quality is the percentage of problem assets a bank holds compared to its total assets. As of June 30, 2017, 0.89 percent of The State Bank of Blue Rapids'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 1.04 percent.

Banks maintain a reserve known as an "allowance for loan and lease losses" to deal with troubled assets . The size of that reserve can be a widely used indicator when evaluating a bank's ability to manage troubled assets, especially when compared to the total amount of at-risk loans. Unfortunately, the FDIC did not provide information on The State Bank of Blue Rapids'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, increasing its capital buffer, or use them to address problematic loans, likely making the bank better prepared to withstand economic trouble. Conversely, losses take away from a bank's ability to do those things.

On Bankrate's test of earnings, The State Bank of Blue Rapids scored 8 out of a possible 30, coming in below the national average of 16.52.

One important way to measure a bank's earnings is return on equity, or net income (profit, basically) divided by total equity. The most recent annualized quarterly return on equity for The State Bank of Blue Rapids was 3.25 percent, below the national average of 9.28 percent.

The bank earned net income of $82,000 on total equity of $5.1 million for the twelve months ended June 30, 2017. The bank had an annualized return on average assets, or ROA, of 0.36 percent, below the 1 percent deemed satisfactory in accordance with industry standards and below 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.