Safe and Sound

Adams Bank & Trust

Ogallala, NE
4
Star Rating
Ogallala, NE-based Adams Bank & Trust is an FDIC-insured bank founded in 1962. As of June 30, 2017, the bank had equity of $78.9 million on assets of $734.9 million.

With 163 full-time employees in 19 offices in multiple states, the bank holds loans and leases worth $656.3 million, including real estate loans of $403.4 million. U.S. bank customers currently have $600.2 million in deposits with the bank.

Overall, Bankrate believes that, as of June 30, 2017, Adams Bank & Trust exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Keep reading for a look at how the bank did on the three important criteria Bankrate used to evaluate American banks.

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SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

Capital acts as a cushion against losses and provides protection for depositors during times of financial trouble for the bank. It follows then that when it comes to measuring an an institution's financial resilience, capital is essential. From a safety and soundness perspective, the higher the capital, the better.
Adams Bank & Trust scored below the national average of 13.38 on our test to measure the adequacy of a bank's capital, racking up 12 out of a possible 30 points.

One widely used measure of this buffer is a bank's Tier 1 capital ratio. Adams Bank & Trust's Tier 1 capital ratio was 8.64 percent, higher than the 6 percent level considered adequate by regulators, but below the national average of 25.16 percent. A higher capital ratio means the bank will be better able to weather economic downturns.

Overall, Adams Bank & Trust held equity amounting to 10.74 percent of its assets, which was lower than the national average of 12.10 percent.

Asset Quality Score

Bankrate uses this test to estimate the effect of troubled assets, such as unpaid loans, on the bank's loan loss reserves and overall capitalization.

A bank with extensive holdings of these types of assets may eventually be required 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, resulting in lower earnings and potentially more risk of a future failure.

Adams Bank & Trust scored below the national average of 37.62 on Bankrate's asset quality test, racking up 36 out of a possible 40 points .

A handy indicator of asset quality is the percentage of problem assets a bank holds compared to its total assets. As of June 30, 2017, 1.04 percent of Adams 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 exactly equal to the national average.

Banks maintain a reserve known as an "allowance for loan and lease losses" to deal with troubled assets . That reserve's size can be a widely used indicator when evaluating a bank's ability to manage troubled assets, especially when compared to the total amount of problem loans. Unfortunately, the FDIC did not provide information on Adams Bank & Trust's loan loss allowance in its most recent filings.

Earnings score

A bank's earnings performance affects its safety and soundness. A bank can retain its earnings, giving a boost to its capital cushion, or put them to work addressing problematic loans, likely making the bank better able to withstand financial trouble. Obviously, banks that are losing money have less ability to do those things.

Adams Bank & Trust scored 18 out of a possible 30 on Bankrate's test of earnings, beating out the national average of 16.52.

One key way to measure a bank's earnings is return on equity, calculated by dividing net income (profit, essentially) by total equity. Adams Bank & Trust's most recent annualized quarterly return on equity was 9.96 percent, above the national average of 9.28 percent.

For the twelve months ended June 30, 2017, the bank reported net income of $3.9 million on total equity of $78.9 million. The bank reported an annualized return on average assets, or ROA, of 1.09 percent, above the 1 percent deemed satisfactory in accordance with industry standards, but 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.