Safe and Sound

Auburn State Bank

Auburn, NE
5
Star Rating
Founded in 1905, Auburn State Bank is an FDIC-insured bank headquartered in Auburn, NE. As of June 30, 2017, the bank held equity of $28.3 million on $169,749,000 in assets.

Thanks to the efforts of 28 full-time employees in 2 offices in NE, the bank holds loans and leases worth $81.2 million, $54.3 million of which are for real estate. U.S. bank customers currently have $139.1 million in deposits with the bank.

Overall, Bankrate believes that, as of June 30, 2017, Auburn State Bank exhibited a superior condition, earning a full 5 stars for safety and soundness. Keep reading for an analysis of how the bank faired on the three major criteria Bankrate used to score U.S. banks on safety and soundness.

WHAT IS
SAFE AND SOUND?

Find out

THE INSTITUTION'S SCORE

Capital Score

Capital works as a buffer against losses and affords protection for accountholders when a bank is experiencing financial instability. Therefore, when it comes to measuring an a bank's financial stability, capital is key. When it comes to safety and soundness, the more capital, the better.
Auburn State Bank beat out the national average of 13.38 points on our test to measure the adequacy of a bank's capital, achieving a score of 24 out of a possible 30 points.

One way to measure this buffer is looking at a bank's Tier 1 capital ratio. Auburn State Bank's Tier 1 capital ratio was 27.82 percent, above the 6 percent level considered adequate by regulators, and higher than the national average of 25.16 percent. A higher capital ratio means the bank will be better able to stand up to financial headwinds.

Overall, Auburn State Bank held equity amounting to 16.67 percent of its assets, which exceeded the national average of 12.10 percent.

Asset Quality Score

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

A bank with large numbers of these kinds of assets may eventually have to use capital to cover losses, diminishing 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, resulting in depressed earnings and potentially more risk of a future failure.

On Bankrate's test of asset quality, Auburn State Bank scored 40 out of a possible 40 points, above the national average of 37.62 points.

The percentage of problem assets a bank holds compared to its total assets is a helpful indicator of asset quality.As of June 30, 2017, 0.11 percent of Auburn State Bank'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 known as an "allowance for loan and lease losses" to deal with problem assets . Comparing the how large that reserve is to the total amount of problematic loans can be a useful indicator when evaluating a bank's ability to manage troubled assets. Auburn State Bank's loan loss allowance was 1,158.43 percent of its total noncurrent loans, higher than 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 has an effect on its long-term survivability. A bank can retain its earnings, boosting its capital buffer, or put them to work addressing problematic loans, potentially making the bank better able to withstand financial shocks. Obviously, banks that are losing money have less ability to do those things.

On Bankrate's earnings test, Auburn State Bank scored 14 out of a possible 30, lower than the national average of 16.52.

One important measure of a bank's earnings is return on equity, calculated by dividing net income (profit, essentially) by total equity. The most recent annualized quarterly return on equity for Auburn State Bank was 6.65 percent, below the national average of 9.28 percent.

For the twelve months ended June 30, 2017, the bank earned net income of $922,000 on total equity of $28.3 million. The bank reported an annualized return on average assets, or ROA, of 1.08 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.