Safe and Sound

Apex Bank

Camden, TN
5
Star Rating
Apex Bank is an FDIC-insured bank started in 1931 and currently headquartered in Camden, TN. The bank has equity of $86.5 million on assets of $524.9 million, according to December 31, 2017, regulatory filings.

Thanks to the work of 164 full-time employees in 12 offices in TN, the bank has amassed loans and leases worth $417.9 million, including real estate loans of $388.2 million. The bank currently holds $419.5 million in deposits from U.S. customers.

Overall, Bankrate believes that, as of December 31, 2017, Apex Bank exhibited a superior condition, earning a full 5 stars for safety and soundness. Here's an analysis of how the bank did on the three key criteria Bankrate used to grade U.S. banks on safety and soundness.

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THE INSTITUTION'S SCORE

Capital Score

Capital works as a cushion against losses and as protection for depositors during periods of financial trouble for the bank. It follows then that a bank's level of capital is a key measurement of an institution's financial fortitude. From a safety and soundness perspective, the higher the capital, the better.

Apex Bank exceeded the national average of 13.13 points on our test to measure the adequacy of a bank's capital, receiving a score of 20 out of a possible 30 points.

A bank's Tier 1 capital ratio is an important measure of this buffer. Apex Bank's Tier 1 capital ratio was 21.78 percent, above the 6 percent level considered adequate by regulators, but under the national average of 25.65 percent. A higher capital ratio means the bank will be better able to weather economic downturns.

Overall, Apex Bank held equity amounting to 16.48 percent of its assets, which exceeded the national average of 12.03 percent.

Asset Quality Score

This test is intended to try to understand how the bank's loan loss reserves and overall capitalization could be affected by troubled assets, such as unpaid loans.

Having lots of these types of assets means a bank may have to use capital to absorb losses, shrinking its buffer of equity. Many of those assets are also likely to be in non-accrual status and thus aren't earning interest for the bank, resulting in reduced earnings and potentially more risk of a failure in the future.

Apex Bank finished below the national average of 37.49 on Bankrate's test of asset quality, racking up 28 out of a possible 40 points .

A useful indicator of asset quality is the percentage of problem assets a bank holds compared to its total assets. As of December 31, 2017, 3.43 percent of Apex Bank'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 1.01 percent.

Banks maintain a reserve known as an "allowance for loan and lease losses" to deal with troubled assets . How large that reserve is can be a useful indicator when evaluating a bank's ability to manage troubled assets, especially when compared to the total amount of problematic loans. Unfortunately, the FDIC did not provide information on Apex Bank's loan loss allowance in its most recent filings.

Earnings score

How profitable a bank is affects 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, likely making the bank better prepared to withstand financial shocks. Conversely, losses take away from a bank's ability to do those things.

Apex Bank exceeded the national average on Bankrate's test of earnings, achieving a score of 30 out of a possible 30.

Return on equity, calculated by dividing net income (essentially, profit) by total equity, is one important measure of a bank's earnings. The most recent annualized quarterly return on equity for Apex Bank was 22.62 percent, above the national average of 8.10 percent.

The bank reported net income of $18.4 million on total equity of $86.5 million for the twelve months ended December 31, 2017. The bank reported an annualized return on average assets, or ROA, of 3.53 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.