Safe and Sound

Alamosa State Bank

Alamosa, CO
5
Star Rating
Alamosa State Bank is an Alamosa, CO-based, FDIC-insured bank started in 1907. Regulatory filings show the bank having equity of $22.0 million on assets of $240.5 million, as of December 31, 2017.

Thanks to the efforts of 35 full-time employees in 2 offices in CO, the bank currently holds loans and leases worth $124.8 million, including $84.3 million worth of real estate loans. The bank currently holds $217.4 million in deposits from U.S. customers.

Overall, Bankrate believes that, as of December 31, 2017, Alamosa State Bank exhibited a superior condition, earning a full 5 stars for safety and soundness. Keep reading for a look at how the bank fared on the three key criteria Bankrate used to score American banks on safety and soundness.

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THE INSTITUTION'S SCORE

Capital Score

When it comes to measuring an an institution's financial strength, capital is important. It acts as a cushion against losses and affords protection for depositors when a bank is struggling financially. When it comes to safety and soundness, more capital is better.

Alamosa State Bank received a score of 10 out of a possible 30 points on our test to measure capital adequacy, failing to reach the national average of 13.13.

One widely followed measure of this buffer is a bank's Tier 1 capital ratio. Alamosa State Bank's Tier 1 capital ratio was 16.54 percent, above the 6 percent level regulators consider adequate, but below the national average of 25.65 percent. The higher the capital ratio, the better the bank will be able to stand up to financial headwinds.

Overall, Alamosa State Bank held equity amounting to 9.16 percent of its assets, which was lower than the national average of 12.03 percent.

Asset Quality Score

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

Having large numbers of these kinds of assets may eventually require a bank to use capital to absorb losses, cutting down on its cushion of equity. 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 future failure.

Alamosa State Bank did better than the national average of 37.49 on Bankrate's test of asset quality, racking up 40 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 December 31, 2017, none of Alamosa State 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 1.01 percent.

Banks keep a reserve to handle troubled assets known as an "allowance for loan and lease losses." Comparing the reserve's size to the total amount of problematic loans can be a handy indicator when evaluating a bank's ability to manage troubled assets. Unfortunately, the FDIC did not provide information on Alamosa State Bank's loan loss allowance in its most recent filings.

Earnings score

A bank's ability to earn money affects its safety and soundness. Earnings may be retained by the bank, increasing its capital buffer, or be used to deal with problematic loans, potentially making the bank better prepared to withstand economic shocks. Obviously, banks that are losing money have less ability to do those things.

On Bankrate's test of earnings, Alamosa State Bank scored 28 out of a possible 30, beating the national average of 15.12.

One widely used measure of a bank's earnings is return on equity, calculated by dividing net income (essentially profit) by total equity. The most recent annualized quarterly return on equity for Alamosa State Bank was 18.89 percent, above the national average of 8.10 percent.

For the twelve months ended December 31, 2017, the bank earned net income of $4.1 million on total equity of $22.0 million. The bank experienced an annualized return on average assets, or ROA, of 1.70 percent, above the 1 percent deemed satisfactory in accordance with industry standards, and above the average for U.S. banks of 1.00 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.