Safe and Sound

Bank of Eastern Oregon

Heppner, OR
4
Star Rating
Founded in 1945, Bank of Eastern Oregon is an FDIC-insured bank based in Heppner, OR. As of December 31, 2017, the bank held equity of $40.5 million on assets of $414.4 million.

With 117 full-time employees in 14 offices in multiple states, the bank currently holds loans and leases worth $318.9 million, including real estate loans of $205.9 million. U.S. bank customers currently have $370.6 million in deposits with the bank.

Overall, Bankrate believes that, as of December 31, 2017, Bank of Eastern Oregon exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Keep reading for an analysis of how the bank fared on the three major criteria Bankrate used to grade U.S. banks.

WHAT IS
SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

Capital is a valuable measurement of a bank's financial resilience. It works as a cushion against losses and affords protection for depositors when a bank is experiencing financial trouble. When looking at safety and soundness, more capital is better.

On our test to measure the adequacy of a bank's capital, Bank of Eastern Oregon received a score of 10 out of a possible 30 points, below the national average of 13.13.

A bank's Tier 1 capital ratio is a widely used measure of this buffer. Bank of Eastern Oregon's Tier 1 capital ratio was 11.19 percent, exceeding the 6 percent level considered adequate by regulators, 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 economic difficulties.

Overall, Bank of Eastern Oregon held equity amounting to 9.77 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 effect of troubled assets, such as unpaid mortgages, on the bank's loan loss reserves and overall capitalization.

Having lots of these kinds of assets may eventually require a bank to use capital to absorb losses, diminishing its cushion of equity. Many of those assets are also likely to be in non-accrual status and thus aren't earning money, resulting in reduced earnings and potentially more risk of a failure in the future.

Bank of Eastern Oregon scored 28 out of a possible 40 points on Bankrate's test of asset quality, less than the national average of 37.49.

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, 2.69 percent of Bank of Eastern Oregon's loans were noncurrent -- in other words, 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 keep a reserve known as an "allowance for loan and lease losses" to deal with problem assets . How large that reserve is can be a helpful 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 Bank of Eastern Oregon's loan loss allowance in its most recent filings.

Earnings score

How profitable a bank is has an effect on its long-term survivability. Earnings can be retained by the bank, boosting its capital cushion, or be used to deal with problematic loans, likely making the bank more resilient in times of trouble. Conversely, losses take away from a bank's ability to do those things.

Bank of Eastern Oregon received above-average marks on Bankrate's test of earnings, achieving a score of 18 out of a possible 30.

One key 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 Bank of Eastern Oregon was 8.54 percent, above the national average of 8.10 percent.

The bank earned net income of $3.4 million on total equity of $40.5 million for the twelve months ended December 31, 2017. The bank experienced an annualized return on average assets, or ROA, of 0.86 percent, below the 1 percent deemed satisfactory in accordance with industry standards and below 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.