Safe and Sound

RCB Bank

Claremore, OK
5
Star Rating
Claremore, OK-based RCB Bank is an FDIC-insured bank started in 1936. As of June 30, 2017, the bank held equity of $272.1 million on assets of $2.81 billion.

Thanks to the work of 703 full-time employees in 52 offices in multiple states, the bank holds loans and leases worth $1.67 billion, including real estate loans of $1.09 billion. The bank currently holds $2.47 billion in deposits from U.S. customers.

Overall, Bankrate believes that, as of June 30, 2017, RCB 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 key criteria Bankrate used to score U.S. banks on safety and soundness.

WHAT IS
SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

Capital acts as a cushion against losses and as protection for accountholders when a bank is struggling financially. It follows then that when it comes to measuring an an institution's financial stability, capital is key. From a safety and soundness perspective, more capital is preferred.
On our test to measure capital adequacy, RCB Bank received a score of 8 out of a possible 30 points, less than the national average of 13.38.

One way to measure this buffer is looking at a bank's Tier 1 capital ratio. RCB Bank's Tier 1 capital ratio was 11.63 percent, exceeding the 6 percent level regulators consider adequate, but less than the national average of 25.16 percent. The higher the capital ratio, the better the bank will be able to stand up to financial challenges.

Overall, RCB Bank held equity amounting to 9.70 percent of its assets, which was lower than the national average of 12.10 percent.

Asset Quality Score

This test's purpose is to estimate how the bank's capitalization and allocated loan loss reserves could be affected by troubled assets, such as past-due mortgages.

A bank with extensive holdings of these types of assets may eventually have to use capital to cover losses, shrinking its equity buffer. Many of those assets are also likely to be in non-accrual status and thus aren't earning money, resulting in depressed earnings and potentially more risk of a failure in the future.

RCB Bank scored 40 out of a possible 40 points on Bankrate's asset quality test, beating the national average of 37.62.

A handy indicator of asset quality is the percentage of problem assets a bank holds compared to its total assets. As of June 30, 2017, 0.46 percent of RCB Bank'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 keep a reserve to deal with troubled assets known as an "allowance for loan and lease losses." Comparing the the size of that reserve to the total amount of problem 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 RCB Bank's loan loss allowance in its most recent filings.

Earnings score

How profitable a bank is has an effect on its safety and soundness. A bank can retain its earnings, boosting its capital cushion, or use them to address problematic loans, potentially making the bank more resilient in times of trouble. Losses, on the other hand, lessen a bank's ability to do those things.

RCB Bank scored 22 out of a possible 30 on Bankrate's earnings test, better than the national average of 16.52.

One important way to measure a bank's earnings is return on equity, or net income (essentially profit) divided by the total amount of equity. RCB Bank's most recent annualized quarterly return on equity was 13.45 percent, above the national average of 9.28 percent.

For the twelve months ended June 30, 2017, the bank reported net income of $17.5 million on total equity of $272.1 million. The bank experienced an annualized return on average assets, or ROA, of 1.25 percent, above the 1 percent deemed satisfactory in accordance with industry standards, and above 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.