Safe and Sound

COMMUNITY BANK OF OKLAHOMA

Verden, OK
5
Star Rating
COMMUNITY BANK OF OKLAHOMA is an FDIC-insured bank founded in 1907 and currently based in Verden, OK. As of December 31, 2017, the bank had equity of $5.5 million on $45.6 million in assets.

With 16 full-time employees in 3 offices in OK, the bank has amassed loans and leases worth $31.1 million, including real estate loans of $18.8 million. U.S. bank customers currently have $39.9 million in deposits with the bank.

Overall, Bankrate believes that, as of December 31, 2017, COMMUNITY BANK OF OKLAHOMA 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.

WHAT IS
SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

When it comes to measuring an a bank's financial resilience, capital is key. It acts as a cushion against losses and affords protection for accountholders when a bank is experiencing economic instability. When looking at safety and soundness, the more capital, the better.

On our test to measure capital adequacy, COMMUNITY BANK OF OKLAHOMA racked up 16 out of a possible 30 points, above the national average of 13.13.

One essential measure of this buffer is a bank's Tier 1 capital ratio. COMMUNITY BANK OF OKLAHOMA's Tier 1 capital ratio was 14.64 percent, exceeding the 6 percent level regulators consider adequate, but under the national average of 25.65 percent. The higher the capital ratio, the better the bank will be able to weather financial challenges.

Overall, COMMUNITY BANK OF OKLAHOMA held equity amounting to 12.09 percent of its assets, which exceeded the national average of 12.03 percent.

Asset Quality Score

This test is intended to estimate how the bank's capitalization and allocated loan loss reserves could be affected by troubled assets, such as past-due mortgages.

Having large numbers of these kinds of assets may eventually require a bank to use capital to cover losses, shrinking 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 depressed earnings and potentially more risk of a future failure.

On Bankrate's test of asset quality, COMMUNITY BANK OF OKLAHOMA scored 36 out of a possible 40 points, falling short of the national average of 37.49 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, 1.15 percent of COMMUNITY BANK OF OKLAHOMA'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 to handle troubled assets known as an "allowance for loan and lease losses." Comparing the reserve's size to the total amount of problem loans can be a handy indicator when evaluating a bank's ability to manage problem assets. Unfortunately, the FDIC did not provide information on COMMUNITY BANK OF OKLAHOMA's loan loss allowance in its most recent filings.

Earnings score

A bank's earnings performance affects its safety and soundness. A bank can retain its earnings, increasing its capital buffer, or use them to address problematic loans, likely making the bank more resilient in tough times. Banks that are losing money, however, have less ability to do those things.

On Bankrate's test of earnings, COMMUNITY BANK OF OKLAHOMA scored 20 out of a possible 30, exceeding the national average of 15.12.

Return on equity, calculated by dividing net income (essentially, profit) by total equity, is one important way to measure a bank's earnings. The most recent annualized quarterly return on equity for COMMUNITY BANK OF OKLAHOMA was 10.71 percent, above the national average of 8.10 percent.

The bank earned net income of $582,000 on total equity of $5.5 million for the twelve months ended December 31, 2017. The bank experienced an annualized return on average assets, or ROA, of 1.28 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.