Safe and Sound

1st Bank & Trust

Broken Bow, OK
5
Star Rating
1st Bank & Trust is an FDIC-insured bank founded in 1946 and currently based in Broken Bow, OK. The bank has equity of $13.8 million on assets of $141.9 million, according to June 30, 2017, regulatory filings.

Thanks to the efforts of 40 full-time employees in 4 offices in OK, the bank has amassed loans and leases worth $87.3 million, $56.5 million of which are for real estate. The bank currently holds $127.8 million in deposits from U.S. customers.

Overall, Bankrate believes that, as of June 30, 2017, 1st Bank & Trust exhibited a superior condition, earning a full 5 stars for safety and soundness. Here's a look at how the bank did on the three important criteria Bankrate used to grade American banks on safety and soundness.

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THE INSTITUTION'S SCORE

Capital Score

Capital is a key measurement of a bank's financial strength. It works as a bulwark against losses and provides protection for accountholders when a bank is experiencing financial trouble. When looking at safety and soundness, the more capital, the better.
1st Bank & Trust received a score of 10 out of a possible 30 points on our test to measure capital adequacy, less than the national average of 13.38.

One essential measure of this buffer is a bank's Tier 1 capital ratio. 1st Bank & Trust's Tier 1 capital ratio was 15.56 percent, exceeding the 6 percent level regulators consider adequate, but under the national average of 25.16 percent. The higher the capital ratio, the better the bank will be able to weather financial challenges.

Overall, 1st Bank & Trust held equity amounting to 9.72 percent of its assets, which was lower than the national average of 12.10 percent.

Asset Quality Score

This test is intended to estimate how the bank's reserves set aside to cover loan losses, as well as overall capitalization could be affected by problem assets, such as unpaid mortgages.

Having extensive holdings of these types of assets means a bank could have to use capital to absorb losses, decreasing its buffer of equity. It also means that there are likely to be many assets that are in non-accrual status and thus aren't earning interest for the bank, resulting in depressed earnings and potentially more risk of a failure in the future.

1st Bank & Trust exceeded the national average of 37.62 on Bankrate's test of asset quality, racking up 40 out of a possible 40 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, 0.12 percent of 1st Bank & Trust'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 keep a reserve to deal with troubled assets known as an "allowance for loan and lease losses." How large that reserve is can be a helpful indicator when evaluating a bank's ability to manage troubled assets, especially when compared to the total amount of problematic loans. 1st Bank & Trust's loan loss allowance was 937.61 percent of its total noncurrent loans, exceeding the national average. All else being equal, the higher the ratio of loan loss allowance to noncurrent loans, the better.

Earnings score

A bank's earnings performance affects its long-term survivability. Earnings can be retained by the bank, boosting its capital cushion, or be used to deal with problematic loans, likely making the bank better able to withstand financial shocks. However, banks that are losing money are less able to do those things.

On Bankrate's earnings test, 1st Bank & Trust scored 30 out of a possible 30, above the national average of 16.52.

One important measure of a bank's earnings is return on equity, calculated by dividing net income (essentially profit) by the total amount of equity. The most recent annualized quarterly return on equity for 1st Bank & Trust was 25.34 percent, above the national average of 9.28 percent.

The bank earned net income of $1.7 million on total equity of $13.8 million for the twelve months ended June 30, 2017. The bank experienced an annualized return on average assets, or ROA, of 2.43 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.