Safe and Sound

Advantage Bank

Oklahoma City, OK
4
Star Rating
Advantage Bank is an Oklahoma City, OK-based, FDIC-insured bank dating back to 1913. The bank holds equity of $7.8 million on $59,057,000 in assets, according to June 30, 2017, regulatory filings.

With 29 full-time employees in 2 offices in OK, the bank currently holds loans and leases worth $35.9 million, including real estate loans of $31.9 million. U.S. bank customers currently have $51.2 million in deposits with the bank.

Overall, Bankrate believes that, as of June 30, 2017, Advantage Bank 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 U.S. banks.

WHAT IS
SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

Capital is an essential measurement of a bank's financial resilience. It works as a cushion against losses and affords protection for accountholders when a bank is experiencing financial instability. From a safety and soundness perspective, the higher the capital, the better.
On our test to measure capital adequacy, Advantage Bank racked up 18 out of a possible 30 points, better than the national average of 13.38.

A bank's Tier 1 capital ratio is a widely followed measure of this buffer. Advantage Bank's Tier 1 capital ratio was 16.31 percent, higher than the 6 percent level considered adequate by regulators, but less 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, Advantage Bank held equity amounting to 13.18 percent of its assets, which exceeded the national average of 12.10 percent.

Asset Quality Score

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

Having a large number of these types of assets suggests a bank could have to use capital to cover losses, shrinking its equity buffer. Many of those assets are also likely to be in non-accrual status and thus aren't earning interest for the bank, reducing earnings and increasing the chances of a failure in the future.

Advantage Bank fell below the national average of 37.62 on Bankrate's test of asset quality, racking up 32 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, 3.30 percent of Advantage Bank's loans were noncurrent, meaning they were more than 90 days past due or were in non-accrual status. That's above the national average of 1.04 percent.

Banks keep a reserve to deal with problem assets known as an "allowance for loan and lease losses." How large that reserve is can be a useful indicator when evaluating a bank's ability to manage problem assets, especially when compared to the total amount of problem loans. Unfortunately, the FDIC did not provide information on Advantage Bank's loan loss allowance in its most recent filings.

Earnings score

A bank's profitability affects its long-term survivability. A bank can retain its earnings, expanding its capital buffer, or put them to work addressing problematic loans, potentially making the bank better able to withstand financial shocks. Conversely, losses diminish a bank's ability to do those things.

Advantage Bank scored 10 out of a possible 30 on Bankrate's earnings test, falling short of the national average of 16.52.

One widely used measure of a bank's earnings is return on equity, calculated by dividing net income (essentially profit) by the total amount of equity. Advantage Bank's most recent annualized quarterly return on equity was 4.09 percent, below the national average of 9.28 percent.

The bank recorded net income of $156,000 on total equity of $7.8 million for the twelve months ended June 30, 2017. The bank had an annualized return on average assets, or ROA, of 0.52 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.