Safe and Sound

The Stockgrowers State Bank of Ashland, Kansas

Ashland, KS
5
Star Rating
Ashland, KS-based The Stockgrowers State Bank of Ashland, Kansas is an FDIC-insured bank started in 1885. Regulatory filings show the bank having equity of $18.0 million on $133.2 million in assets, as of December 31, 2017.

Thanks to the efforts of 25 full-time employees in 2 offices in KS, the bank currently holds loans and leases worth $74.3 million, $21.9 million of which are for real estate. The bank currently holds $107.4 million in deposits from U.S. customers.

Overall, Bankrate believes that, as of December 31, 2017, The Stockgrowers State Bank of Ashland, Kansas exhibited a superior condition, earning a full 5 stars for safety and soundness. Keep reading for a breakdown of how the bank fared on the three major criteria Bankrate used to score 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 crucial measurement of an institution's financial resilience. It acts as a buffer against losses and affords protection for depositors during periods of financial instability for the bank. When it comes to safety and soundness, the higher the capital, the better.

On our test to measure capital adequacy, The Stockgrowers State Bank of Ashland, Kansas scored 18 out of a possible 30 points, beating out the national average of 13.13.

One widely used measure of this buffer is a bank's Tier 1 capital ratio. The Stockgrowers State Bank of Ashland, Kansas's Tier 1 capital ratio was 19.13 percent, exceeding the 6 percent level regulators consider adequate, but lower than the national average of 25.65 percent. A higher capital ratio suggests the bank will be better able to stand up to financial headwinds.

Overall, The Stockgrowers State Bank of Ashland, Kansas held equity amounting to 13.51 percent of its assets, which exceeded the national average of 12.03 percent.

Asset Quality Score

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

A bank with extensive holdings of these types of assets could eventually be required to use capital to cover losses, decreasing its equity buffer. Many of those assets are also likely to be in non-accrual status and thus aren't earning money, resulting in diminished earnings and potentially more risk of a future failure.

On Bankrate's test of asset quality, The Stockgrowers State Bank of Ashland, Kansas scored 40 out of a possible 40 points, better than the national average of 37.49 points.

The percentage of problem assets a bank holds compared to its total assets is a widely used indicator of asset quality.As of December 31, 2017, none of The Stockgrowers State Bank of Ashland, 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 troubled assets known as an "allowance for loan and lease losses." Comparing the size of that reserve to the total amount of at-risk loans can be a widely used indicator when evaluating a bank's ability to manage problem assets. Unfortunately, the FDIC did not provide information on The Stockgrowers State Bank of Ashland, Kansas's loan loss allowance in its most recent filings.

Earnings score

A bank's ability to earn money affects its safety and soundness. A bank can retain its earnings, boosting its capital buffer, or use them to address problematic loans, likely making the bank more resilient in times of trouble. Conversely, losses take away from a bank's ability to do those things.

The Stockgrowers State Bank of Ashland, Kansas received below-average marks on Bankrate's earnings test, achieving a score of 14 out of a possible 30.

Return on equity, calculated by dividing net income (profit, basically) by the total amount of equity, is one important way to measure a bank's earnings. The Stockgrowers State Bank of Ashland, Kansas's most recent annualized quarterly return on equity was 6.17 percent, below the national average of 8.10 percent.

For the twelve months ended December 31, 2017, the bank reported net income of $1.1 million on total equity of $18.0 million. The bank experienced an annualized return on average assets, or ROA, of 0.86 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.