Safe and Sound

Ballinger National Bank

Ballinger, TX
4
Star Rating
Ballinger, TX-based Ballinger National Bank is an FDIC-insured bank founded in 1997. Regulatory filings show the bank having equity of $4.4 million on assets of $43.5 million, as of June 30, 2017.

Thanks to the work of 15 full-time employees, the bank currently holds loans and leases worth $15.6 million, including real estate loans of $8.6 million. U.S. bank customers currently have $39.0 million in deposits with the bank.

Overall, Bankrate believes that, as of June 30, 2017, Ballinger National Bank exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Keep reading for a look at how the bank faired on the three major criteria Bankrate used to evaluate U.S. banks.

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THE INSTITUTION'S SCORE

Capital Score

Capital works as a cushion against losses and as protection for accountholders when a bank is experiencing financial instability. It follows then that a bank's level of capital is a crucial measurement of an institution's financial resilience. From a safety and soundness perspective, the more capital, the better.
On our test to measure the adequacy of a bank's capital, Ballinger National Bank received a score of 12 out of a possible 30 points, coming in below the national average of 13.38.

A bank's Tier 1 capital ratio is an important measure of this buffer. Ballinger National Bank's Tier 1 capital ratio was 22.22 percent, higher than the 6 percent level regulators consider adequate, 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 financial challenges.

Overall, Ballinger National Bank held equity amounting to 10.05 percent of its assets, which was lower than the national average of 12.10 percent.

Asset Quality Score

This test's purpose is to try to understand how the bank's reserves set aside to cover loan losses, as well as overall capitalization could be affected by troubled assets, such as unpaid mortgages.

Having extensive holdings of these types of assets suggests a bank may have to use capital to cover losses, shrinking its equity cushion. It also means that there are likely to be many assets that are in non-accrual status and thus aren't earning money, reducing earnings and increasing the risk of a failure in the future.

Ballinger National Bank scored 36 out of a possible 40 points on Bankrate's test of asset quality, coming in below the national average of 37.62.

A helpful indicator of asset quality is the percentage of problem assets a bank holds compared to its total assets. As of June 30, 2017, 2.08 percent of Ballinger National 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 maintain a reserve known as an "allowance for loan and lease losses" to deal with troubled assets . The size of that reserve can be a helpful indicator when evaluating a bank's ability to manage troubled assets, especially when compared to the total amount of problematic loans. Unfortunately, the FDIC did not provide information on Ballinger National Bank's loan loss allowance in its most recent filings.

Earnings score

A bank's ability to earn money affects its long-term survivability. Earnings can be retained by the bank, boosting its capital cushion, or be used to address problematic loans, potentially making the bank better prepared to withstand financial trouble. Losses, on the other hand, lessen a bank's ability to do those things.

Ballinger National Bank scored 18 out of a possible 30 on Bankrate's test of earnings, above the national average of 16.52.

One important measure of a bank's earnings is return on equity, calculated by dividing net income (essentially profit) by total equity. Ballinger National Bank'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 earned net income of $208,000 on total equity of $4.4 million. The bank experienced an annualized return on average assets, or ROA, of 0.96 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.