Safe and Sound

Elkhorn Valley Bank & Trust

Norfolk, NE
5
Star Rating
Elkhorn Valley Bank & Trust is a Norfolk, NE-based, FDIC-insured bank founded in 1943. Regulatory filings show the bank having equity of $89.5 million on assets of $773.5 million, as of December 31, 2017.

Thanks to the work of 103 full-time employees in 10 offices in NE, the bank currently holds loans and leases worth $379.7 million, $163.3 million of which are for real estate. The bank currently holds $672.3 million in deposits from U.S. customers.

Overall, Bankrate believes that, as of December 31, 2017, Elkhorn Valley Bank & Trust exhibited a superior condition, earning a full 5 stars for safety and soundness. Here's a breakdown of how the bank fared on the three important criteria Bankrate used to evaluate American banks on safety and soundness.

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THE INSTITUTION'S SCORE

Capital Score

Capital acts as a bulwark against losses and as protection for depositors when a bank is experiencing economic instability. It follows then that a bank's level of capital is a key measurement of a bank's financial fortitude. From a safety and soundness perspective, more capital is preferred.

Elkhorn Valley Bank & Trust achieved a score of 14 out of a possible 30 points on our test to measure the adequacy of a bank's capital, above the national average of 13.13.

One important measure of this buffer is a bank's Tier 1 capital ratio. Elkhorn Valley Bank & Trust's Tier 1 capital ratio was 16.13 percent, above the 6 percent level considered adequate by regulators, but less than 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, Elkhorn Valley Bank & Trust held equity amounting to 11.57 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 problem assets, such as unpaid loans, on the bank's reserves set aside to cover loan losses, as well as overall capitalization.

A bank with extensive holdings of these types of assets may eventually be required to use capital to cover losses, decreasing its equity buffer. 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 lower earnings and potentially more risk of a future failure.

On Bankrate's test of asset quality, Elkhorn Valley Bank & Trust scored 40 out of a possible 40 points, above the national average of 37.49 points.

The percentage of problem assets a bank holds compared to its total assets is a useful indicator of asset quality.As of December 31, 2017, 0.24 percent of Elkhorn Valley Bank & Trust's loans were noncurrent, meaning 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 deal with troubled assets known as an "allowance for loan and lease losses." That reserve's size can be a helpful 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 Elkhorn Valley Bank & Trust'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, boosting its capital cushion, or put them to work addressing problematic loans, likely making the bank better able to withstand financial trouble. However, banks that are losing money are less able to do those things.

Elkhorn Valley Bank & Trust outperformed the average on Bankrate's earnings test, achieving a score of 18 out of a possible 30.

Return on equity, calculated by dividing net income (profit, basically) by the total amount of equity, is one important way to measure a bank's earnings. Elkhorn Valley Bank & Trust's most recent annualized quarterly return on equity was 9.41 percent, above the national average of 8.10 percent.

For the twelve months ended December 31, 2017, the bank reported net income of $8.1 million on total equity of $89.5 million. The bank had an annualized return on average assets, or ROA, of 1.04 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.