Safe and Sound

American Exchange Bank, Lindsay, Oklahoma

Lindsay, OK
5
Star Rating
Started in 1924, American Exchange Bank, Lindsay, Oklahoma is an FDIC-insured bank based in Lindsay, OK. As of June 30, 2017, the bank held equity of $7.0 million on assets of $60.2 million.

U.S. bank customers have $51.7 million on deposit at 2 offices in OK run by 15 full-time employees. With that footprint, the bank has amassed loans and leases worth $16.6 million, $9.2 million of which are for real estate.

Overall, Bankrate believes that, as of June 30, 2017, American Exchange Bank, Lindsay, Oklahoma exhibited a superior condition, earning a full 5 stars for safety and soundness. Keep reading for a look at how the bank faired on the three important 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

When it comes to measuring an a bank's financial resilience, capital is useful. It works as a bulwark against losses and affords protection for depositors when a bank is struggling financially. When looking at safety and soundness, the more capital, the better.
American Exchange Bank, Lindsay, Oklahoma achieved a score of 14 out of a possible 30 points on our test to measure the adequacy of a bank's capital, above the national average of 13.38.

A bank's Tier 1 capital ratio is a commonly used measure of this buffer. American Exchange Bank, Lindsay, Oklahoma's Tier 1 capital ratio was 20.17 percent, above the 6 percent level considered adequate by regulators, but under the national average of 25.16 percent. A higher capital ratio suggests the bank will be better able to weather financial headwinds.

Overall, American Exchange Bank, Lindsay, Oklahoma held equity amounting to 11.69 percent of its assets, which was lower than the national average of 12.10 percent.

Asset Quality Score

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

Having lots of these kinds of assets could eventually require a bank to use capital to absorb losses, decreasing its equity buffer. Many of those assets are also likely to be in non-accrual status and no longer earning interest for the bank, resulting in depressed earnings and potentially more risk of a future failure.

American Exchange Bank, Lindsay, Oklahoma scored 40 out of a possible 40 points on Bankrate's test of asset quality, beating out the national average of 37.62.

A widely used indicator of asset quality is the percentage of problem assets a bank holds compared to its total assets. As of June 30, 2017, none of American Exchange Bank, Lindsay, Oklahoma'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 1.04 percent.

Banks maintain a reserve to deal with troubled 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 troubled assets, especially when compared to the total amount of at-risk loans. Unfortunately, the FDIC did not provide information on American Exchange Bank, Lindsay, Oklahoma's loan loss allowance in its most recent filings.

Earnings score

A bank's profitability has an effect on its long-term survivability. A bank can retain its earnings, increasing its capital cushion, or use them to address problematic loans, likely making the bank better able to withstand financial shocks. Losses, on the other hand, take away from a bank's ability to do those things.

On Bankrate's test of earnings, American Exchange Bank, Lindsay, Oklahoma scored 20 out of a possible 30, exceeding the national average of 16.52.

Return on equity, calculated by dividing net income (essentially, profit) by total equity, is one important measure of a bank's earnings. The most recent annualized quarterly return on equity for American Exchange Bank, Lindsay, Oklahoma was 11.02 percent, above the national average of 9.28 percent.

The bank recorded net income of $372,000 on total equity of $7.0 million for the twelve months ended June 30, 2017. The bank experienced an annualized return on average assets, or ROA, of 1.25 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.