Safe and Sound

Liberty Bank and Trust Company

New Orleans, LA
3
Star Rating
Founded in 1972, Liberty Bank and Trust Company is an FDIC-insured bank based in New Orleans, LA. The bank has equity of $49.1 million on $617,108,000 in assets, according to June 30, 2017, regulatory filings.

With 161 full-time employees in 21 offices in multiple states, the bank currently holds loans and leases worth $280.0 million, including real estate loans of $231.7 million. U.S. bank customers currently have $554.2 million in deposits with the bank.

Overall, Bankrate believes that, as of June 30, 2017, Liberty Bank and Trust Company exhibited a generally satisfactory condition, earning 3 out of 5 stars for safety and soundness. Here's an analysis of how the bank did on the three key criteria Bankrate used to score American banks.

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THE INSTITUTION'S SCORE

Capital Score

Capital acts as a cushion against losses and as protection for depositors when a bank is struggling financially. Therefore, when it comes to measuring an an institution's financial fortitude, capital is valuable. From a safety and soundness perspective, the higher the capital, the better.
Liberty Bank and Trust Company finished below the national average of 13.38 on our test to measure the adequacy of a bank's capital, achieving a score of 6 out of a possible 30 points.

A bank's Tier 1 capital ratio is a widely used measure of this buffer. Liberty Bank and Trust Company's Tier 1 capital ratio was 15.03 percent, higher than the 6 percent level regulators consider adequate, but under the national average of 25.16 percent. The higher the capital ratio, the better the bank will be able to weather financial difficulties.

Overall, Liberty Bank and Trust Company held equity amounting to 7.95 percent of its assets, which was lower than the national average of 12.10 percent.

Asset Quality Score

In this test, Bankrate tries to estimate the impact of troubled assets, such as unpaid mortgages, on the bank's capitalization and allocated loan loss reserves.

Having lots of these types of assets means a bank could eventually have to use capital to absorb losses, shrinking its equity cushion. Many of those assets are also likely to be in non-accrual status and thus aren't earning money, reducing earnings and increasing the chances of a future failure.

On Bankrate's asset quality test, Liberty Bank and Trust Company scored 32 out of a possible 40 points, less than the national average of 37.62 points.

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, 1.72 percent of Liberty Bank and Trust Company'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 keep a reserve known as an "allowance for loan and lease losses" to deal with troubled assets . The size of that reserve can be a useful indicator when evaluating a bank's ability to manage troubled assets, especially when compared to the total amount of problem loans. Unfortunately, the FDIC did not provide information on Liberty Bank and Trust Company's loan loss allowance in its most recent filings.

Earnings score

A bank's earnings performance has an effect on its safety and soundness. A bank can retain its earnings, increasing its capital cushion, or put them to work addressing problematic loans, likely making the bank better prepared to withstand financial trouble. Conversely, losses lessen a bank's ability to do those things.

Liberty Bank and Trust Company scored 14 out of a possible 30 on Bankrate's earnings test, below the national average of 16.52.

Return on equity, calculated by dividing net income (profit, essentially) by the total amount of equity, is one key measure of a bank's earnings. Liberty Bank and Trust Company's most recent annualized quarterly return on equity was 6.48 percent, below the national average of 9.28 percent.

For the twelve months ended June 30, 2017, the bank earned net income of $1.5 million on total equity of $49.1 million. The bank experienced an annualized return on average assets, or ROA, of 0.49 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.