Safe and Sound

The American Bank

Wagoner, OK
5
Star Rating
The American Bank is an FDIC-insured bank founded in 1923 and currently headquartered in Wagoner, OK. The bank has equity of $6.4 million on $29,938,000 in assets, according to June 30, 2017, regulatory filings.

With 13 full-time employees, the bank holds loans and leases worth $4.1 million, including real estate loans of $1.4 million. U.S. bank customers currently have $23.4 million in deposits with the bank.

Overall, Bankrate believes that, as of June 30, 2017, The American Bank exhibited a superior condition, earning a full 5 stars for safety and soundness. Here's a breakdown of how the bank did on the three key criteria Bankrate used to evaluate American banks on safety and soundness.

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THE INSTITUTION'S SCORE

Capital Score

Capital works as a bulwark against losses and provides protection for accountholders when a bank is experiencing economic trouble. It follows then that when it comes to measuring an a bank's financial strength, capital is important. When looking at safety and soundness, the higher the capital, the better.
On our test to measure capital adequacy, The American Bank racked up 30 out of a possible 30 points, beating out the national average of 13.38.

One widely followed measure of this buffer is a bank's Tier 1 capital ratio. The American Bank's Tier 1 capital ratio was 91.40 percent, higher than the 6 percent level considered adequate by regulators, and exceeding the national average of 25.16 percent. A higher capital ratio means the bank will be better able to weather economic downturns.

Overall, The American Bank held equity amounting to 21.35 percent of its assets, which exceeded the national average of 12.10 percent.

Asset Quality Score

In this test, Bankrate tries to estimate the effect of problem assets, such as past-due loans, on the bank's loan loss reserves and overall capitalization.

A bank with extensive holdings of these types of assets may eventually be forced to use capital to absorb losses, decreasing its equity buffer. It also means that there are likely to be many assets that are in non-accrual status and no longer earning money, resulting in diminished earnings and potentially more risk of a failure in the future.

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

The percentage of problem assets a bank holds compared to its total assets is a widely used indicator of asset quality.As of June 30, 2017, none of The American 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 known as an "allowance for loan and lease losses" to deal with problem assets . Comparing the the size of that reserve 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 The American Bank's loan loss allowance in its most recent filings.

Earnings score

How profitable a bank is affects its safety and soundness. Earnings can be retained by the bank, expanding its capital buffer, or be used to address problematic loans, likely making the bank better able to withstand financial trouble. Banks that are losing money, however, have less ability to do those things.

The American Bank received below-average marks on Bankrate's earnings test, achieving a score of 2 out of a possible 30.

One widely used measure of a bank's earnings is return on equity, or net income (profit, essentially) divided by the total amount of equity. The American Bank's most recent annualized quarterly return on equity was 0.00 percent, below the national average of 9.28 percent.

For the twelve months ended June 30, 2017, the bank reported net income of $0 on total equity of $6.4 million. The bank experienced an annualized return on average assets, or ROA, of 0.00 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.