Safe and Sound

Bank 2

Oklahoma City, OK
3
Star Rating
Bank 2 is an Oklahoma City, OK-based, FDIC-insured bank founded in 1903. Regulatory filings show the bank having equity of $17.5 million on $136,394,000 in assets, as of June 30, 2017.

Thanks to the work of 75 full-time employees, the bank currently holds loans and leases worth $89.6 million, $75.5 million of which are for real estate. The bank currently holds $114.3 million in deposits from U.S. customers.

Overall, Bankrate believes that, as of June 30, 2017, Bank 2 exhibited a generally satisfactory condition, earning 3 out of 5 stars for safety and soundness. Here's a look at how the bank did on the three major criteria Bankrate used to evaluate U.S. banks.

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THE INSTITUTION'S SCORE

Capital Score

Capital is a valuable measurement of a bank's financial strength. It works as a cushion against losses and as protection for accountholders when a bank is struggling financially. When it comes to safety and soundness, more capital is preferred.
Bank 2 received a score of 8 out of a possible 30 points on our test to measure capital adequacy, below the national average of 13.38.

A bank's Tier 1 capital ratio is a widely used measure of this buffer. Bank 2's Tier 1 capital ratio was 17.46 percent, exceeding the 6 percent level regulators consider adequate, but below the national average of 25.16 percent. The higher the capital ratio, the better the bank will be able to weather financial challenges.

Overall, Bank 2 held equity amounting to 12.83 percent of its assets, which exceeded the national average of 12.10 percent.

Asset Quality Score

This test is intended 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 loans.

A bank with extensive holdings of these types of assets could eventually be forced to use capital to absorb losses, reducing its equity cushion. Many of those assets are also likely to be in non-accrual status and no longer earning interest for the bank, reducing earnings and elevating the risk of a failure in the future.

Bank 2 came in below the national average of 37.62 on Bankrate's asset quality test, racking up 32 out of a possible 40 points .

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, 0.71 percent of Bank 2's loans were noncurrent -- in other words, 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 problem 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 widely used indicator when evaluating a bank's ability to manage problem assets. Unfortunately, the FDIC did not provide information on Bank 2'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, giving a boost to its capital cushion, or use them to deal with problematic loans, potentially making the bank more resilient in tough times. Banks that are losing money, however, have less ability to do those things.

On Bankrate's test of earnings, Bank 2 scored 14 out of a possible 30, falling short of the national average of 16.52.

Return on equity, calculated by dividing net income (essentially, profit) by the total amount of equity, is one important way to measure a bank's earnings. Bank 2's most recent annualized quarterly return on equity was 6.15 percent, below the national average of 9.28 percent.

The bank earned net income of $531,000 on total equity of $17.5 million for the twelve months ended June 30, 2017. The bank experienced an annualized return on average assets, or ROA, of 0.78 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.