Safe and Sound

World's Foremost Bank

Sidney, NE
5
Star Rating
World's Foremost Bank is a Sidney, NE-based, FDIC-insured bank founded in 2001. As of June 30, 2017, the bank had equity of $652.9 million on $5,678,726,000 in assets.

With 710 full-time employees, the bank has amassed loans and leases worth $5.47 billion, including real estate loans of $0. U.S. bank customers currently have $1.11 billion in deposits with the bank.

Overall, Bankrate believes that, as of June 30, 2017, World's Foremost Bank exhibited a superior condition, earning a full 5 stars for safety and soundness. Keep reading for a breakdown of how the bank did on the three major criteria Bankrate used to evaluate American banks on safety and soundness.

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THE INSTITUTION'S SCORE

Capital Score

Capital works as a buffer against losses and affords protection for depositors when a bank is struggling financially. It follows then that a bank's level of capital is a key measurement of a bank's financial strength. From a safety and soundness perspective, the more capital, the better.
On our test to measure capital adequacy, World's Foremost Bank scored 14 out of a possible 30 points, above the national average of 13.38.

A bank's Tier 1 capital ratio is an important measure of this buffer. World's Foremost Bank's Tier 1 capital ratio was 11.58 percent, exceeding the 6 percent level considered adequate by regulators, but lower than the national average of 25.16 percent. A higher capital ratio means the bank will be better able to stand up to economic challenges.

Overall, World's Foremost Bank held equity amounting to 11.50 percent of its assets, which was lower than the national average of 12.10 percent.

Asset Quality Score

In this test, Bankrate tries to determine the impact of troubled assets, such as past-due mortgages, on the bank's loan loss reserves and overall capitalization.

A bank with large numbers of these kinds of assets could eventually have to use capital to cover losses, shrinking its equity cushion. Many of those assets are also likely to be in non-accrual status and thus aren't earning interest for the bank, resulting in lower earnings and potentially more risk of a failure in the future.

World's Foremost Bank scored above the national average of 37.62 on Bankrate's asset quality test, racking up 40 out of a possible 40 points .

The percentage of problem assets a bank holds compared to its total assets is a useful indicator of asset quality.As of June 30, 2017, 0.43 percent of World's Foremost 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 1.04 percent.

Banks maintain a reserve to handle problem assets known as an "allowance for loan and lease losses." The size of that reserve can be a helpful 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 World's Foremost Bank'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, expanding its capital cushion, or use them to address problematic loans, likely making the bank better able to withstand economic trouble. Losses, on the other hand, reduce a bank's ability to do those things.

On Bankrate's earnings test, World's Foremost Bank scored 30 out of a possible 30, better than the national average of 16.52.

One important measure of a bank's earnings is return on equity, or net income (profit, essentially) divided by total equity. The most recent annualized quarterly return on equity for World's Foremost Bank was 26.29 percent, above the national average of 9.28 percent.

For the twelve months ended June 30, 2017, the bank earned net income of $82.7 million on total equity of $652.9 million. The bank reported an annualized return on average assets, or ROA, of 2.90 percent, above the 1 percent deemed satisfactory in accordance with industry standards, and above 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.