Safe and Sound

Bandera Bank

Bandera, TX
5
Star Rating
Bandera Bank is a Bandera, TX-based, FDIC-insured bank dating back to 1986. Regulatory filings show the bank having equity of $6.6 million on $63,249,000 in assets, as of June 30, 2017.

Thanks to the work of 14 full-time employees, the bank currently holds loans and leases worth $34.8 million, including $29.3 million worth of real estate loans. U.S. bank customers currently have $56.6 million in deposits with the bank.

Overall, Bankrate believes that, as of June 30, 2017, Bandera Bank 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 evaluate U.S. banks on safety and soundness.

WHAT IS
SAFE AND SOUND?

Find out

THE INSTITUTION'S SCORE

Capital Score

Capital acts as a cushion against losses and provides protection for accountholders when a bank is struggling financially. Therefore, when it comes to measuring an a bank's financial resilience, capital is crucial. When looking at safety and soundness, more capital is better.
On our test to measure the adequacy of a bank's capital, Bandera Bank received a score of 12 out of a possible 30 points, below the national average of 13.38.

A bank's Tier 1 capital ratio is a commonly used measure of this buffer. Bandera Bank's Tier 1 capital ratio was 24.84 percent, higher than the 6 percent level regulators consider adequate, but below the national average of 25.16 percent. A higher capital ratio suggests the bank will be better able to stand up to economic difficulties.

Overall, Bandera Bank held equity amounting to 10.42 percent of its assets, which was lower than the national average of 12.10 percent.

Asset Quality Score

Bankrate uses this test to estimate the impact of troubled assets, such as past-due mortgages, on the bank's loan loss reserves and overall capitalization.

A bank with a large number of these types of assets may eventually have to use capital to absorb losses, reducing 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 interest for the bank, resulting in diminished earnings and potentially more risk of a failure in the future.

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

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, 0.27 percent of Bandera 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 keep a reserve to deal with troubled assets known as an "allowance for loan and lease losses." Comparing the that reserve's size to the total amount of at-risk loans can be a helpful indicator when evaluating a bank's ability to manage troubled assets. Unfortunately, the FDIC did not provide information on Bandera Bank's loan loss allowance in its most recent filings.

Earnings score

A bank's profitability has an effect on its safety and soundness. Earnings may be retained by the bank, giving a boost to its capital buffer, or be used to deal with problematic loans, potentially making the bank more resilient in tough times. Losses, on the other hand, lessen a bank's ability to do those things.

On Bankrate's test of earnings, Bandera Bank scored 18 out of a possible 30, exceeding the national average of 16.52.

One key measure of a bank's earnings is return on equity, calculated by dividing net income (profit, basically) by the total amount of equity. Bandera Bank's most recent annualized quarterly return on equity was 9.95 percent, above the national average of 9.28 percent.

For the twelve months ended June 30, 2017, the bank earned net income of $325,000 on total equity of $6.6 million. The bank had an annualized return on average assets, or ROA, of 1.06 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.