Safe and Sound

American Exchange Bank

Henryetta, OK
5
Star Rating
American Exchange Bank is an FDIC-insured bank started in 1933 and currently headquartered in Henryetta, OK. The bank has equity of $7.4 million on $60,346,000 in assets, according to June 30, 2017, regulatory filings.

U.S. bank customers have $52.1 million on deposit at 2 offices in OK run by 21 full-time employees. With that footprint, the bank holds loans and leases worth $44.8 million, $32.6 million of which are for real estate.

Overall, Bankrate believes that, as of June 30, 2017, American Exchange Bank exhibited a superior condition, earning a full 5 stars for safety and soundness. Here's an analysis of how the bank did on the three key criteria Bankrate used to score U.S. banks on safety and soundness.

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SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

When it comes to measuring an a bank's financial stability, capital is key. It acts as a cushion against losses and as protection for accountholders when a bank is struggling financially. When it comes to safety and soundness, the higher the capital, the better.
American Exchange Bank racked up 16 out of a possible 30 points on our test to measure capital adequacy, better than the national average of 13.38.

One widely used measure of this buffer is a bank's Tier 1 capital ratio. American Exchange Bank's Tier 1 capital ratio was 17.94 percent, above the 6 percent level considered adequate by regulators, but below the national average of 25.16 percent. The higher the capital ratio, the better the bank will be able to stand up to financial difficulties.

Overall, American Exchange Bank held equity amounting to 12.30 percent of its assets, which exceeded the national average of 12.10 percent.

Asset Quality Score

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

A bank with extensive holdings of these types of assets could eventually be forced to use capital to absorb losses, diminishing its buffer of equity. Many of those assets are also likely to be in non-accrual status and thus aren't earning money, decreasing earnings and increasing the risk of a future failure.

American Exchange Bank scored 32 out of a possible 40 points on Bankrate's test of asset quality, below the national average of 37.62.

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, 2.65 percent of American Exchange Bank's loans were noncurrent -- in other words, 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 troubled assets known as an "allowance for loan and lease losses." Comparing the the size of that reserve to the total amount of problem loans can be a helpful indicator when evaluating a bank's ability to manage problem assets. Unfortunately, the FDIC did not provide information on American Exchange 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, increasing its capital buffer, or use them to address problematic loans, potentially making the bank more resilient in tough times. Losses, on the other hand, diminish a bank's ability to do those things.

On Bankrate's test of earnings, American Exchange Bank scored 22 out of a possible 30, beating out the national average of 16.52.

Return on equity, calculated by dividing net income (profit, essentially) by the total amount of equity, is one important way to measure a bank's earnings. American Exchange Bank's most recent annualized quarterly return on equity was 12.25 percent, above the national average of 9.28 percent.

The bank reported net income of $451,000 on total equity of $7.4 million for the twelve months ended June 30, 2017. The bank had an annualized return on average assets, or ROA, of 1.52 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.