Safe and Sound

Clarkson Bank

Clarkson, NE
5
Star Rating
Clarkson Bank is a Clarkson, NE-based, FDIC-insured bank started in 1934. Regulatory filings show the bank having equity of $7.2 million on $57.1 million in assets, as of December 31, 2017.

Thanks to the efforts of 9 full-time employees, the bank holds loans and leases worth $32.5 million, including real estate loans of $10.9 million. The bank currently holds $43.9 million in deposits from U.S. customers.

Overall, Bankrate believes that, as of December 31, 2017, Clarkson Bank exhibited a superior condition, earning a full 5 stars for safety and soundness. Here's a look at how the bank did on the three major criteria Bankrate used to score U.S. banks on safety and soundness.

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THE INSTITUTION'S SCORE

Capital Score

Capital acts as a cushion against losses and as protection for depositors when a bank is experiencing economic trouble. It follows then that when it comes to measuring an an institution's financial fortitude, capital is key. When it comes to safety and soundness, the more capital, the better.

Clarkson Bank scored above the national average of 13.13 points on our test to measure capital adequacy, receiving a score of 16 out of a possible 30 points.

One way to measure this buffer is looking at a bank's Tier 1 capital ratio. Clarkson Bank's Tier 1 capital ratio was 17.22 percent, above the 6 percent level regulators consider adequate, but less than the national average of 25.65 percent. The higher the capital ratio, the better the bank will be able to weather financial downturns.

Overall, Clarkson Bank held equity amounting to 12.68 percent of its assets, which exceeded the national average of 12.03 percent.

Asset Quality Score

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

A bank with large numbers of these kinds of assets may eventually be required to use capital to absorb losses, reducing its equity buffer. Many of those assets are also likely to be in non-accrual status and thus aren't earning money, decreasing earnings and increasing the risk of a future failure.

On Bankrate's asset quality test, Clarkson Bank scored 36 out of a possible 40 points, less than the national average of 37.49 points.

The percentage of problem assets a bank holds compared to its total assets is a handy indicator of asset quality.As of December 31, 2017, 2.54 percent of Clarkson Bank'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 to deal with problem assets known as an "allowance for loan and lease losses." That reserve's size can be a widely used indicator when evaluating a bank's ability to manage troubled assets, especially when compared to the total amount of problem loans. Unfortunately, the FDIC did not provide information on Clarkson Bank's loan loss allowance in its most recent filings.

Earnings score

A bank's ability to earn money has an effect on its safety and soundness. A bank can retain its earnings, boosting its capital buffer, or use them to address problematic loans, potentially making the bank better able to withstand economic shocks. Conversely, losses take away from a bank's ability to do those things.

Clarkson Bank scored 20 out of a possible 30 on Bankrate's earnings test, above the national average of 15.12.

One widely used way to measure a bank's earnings is return on equity, calculated by dividing net income (profit, basically) by the total amount of equity. Clarkson Bank's most recent annualized quarterly return on equity was 10.67 percent, above the national average of 8.10 percent.

The bank earned net income of $764,000 on total equity of $7.2 million for the twelve months ended December 31, 2017. The bank had an annualized return on average assets, or ROA, of 1.33 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.