Safe and Sound

Evolve Bank & Trust

West Memphis, AR
4
Star Rating
Evolve Bank & Trust is a West Memphis, AR-based, FDIC-insured bank dating back to 1925. As of December 31, 2017, the bank held equity of $40.0 million on assets of $456.9 million.

U.S. bank customers have $368.6 million on deposit at 19 offices in multiple states run by 392 full-time employees. With that footprint, the bank holds loans and leases worth $388.8 million, $288.8 million of which are for real estate.

Overall, Bankrate believes that, as of December 31, 2017, Evolve Bank & Trust 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 key criteria Bankrate used to score U.S. banks.

WHAT IS
SAFE AND SOUND?

Find out

THE INSTITUTION'S SCORE

Capital Score

Capital acts as a cushion against losses and affords protection for depositors during times of financial trouble for the bank. Therefore, when it comes to measuring an an institution's financial resilience, capital is essential. From a safety and soundness perspective, more capital is better.

Evolve Bank & Trust fell short of the national average of 13.13 on our test to measure capital adequacy, achieving a score of 6 out of a possible 30 points.

A bank's Tier 1 capital ratio is an important measure of this buffer. Evolve Bank & Trust's Tier 1 capital ratio was 10.25 percent, above the 6 percent level considered adequate by regulators, but below the national average of 25.65 percent. A higher capital ratio means the bank will be better able to weather financial downturns.

Overall, Evolve Bank & Trust held equity amounting to 8.76 percent of its assets, which was lower than the national average of 12.03 percent.

Asset Quality Score

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

A bank with a large number of these types of assets could eventually have to use capital to absorb losses, reducing its equity cushion. Many of those assets are also likely to be in non-accrual status and no longer earning interest for the bank, resulting in depressed earnings and potentially more risk of a failure in the future.

Evolve Bank & Trust scored 36 out of a possible 40 points on Bankrate's test of asset quality, lower than the national average of 37.49.

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, 1.04 percent of Evolve Bank & Trust'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 . Comparing how large that reserve is to the total amount of at-risk loans can be a useful indicator when evaluating a bank's ability to manage problem assets. Unfortunately, the FDIC did not provide information on Evolve Bank & Trust's loan loss allowance in its most recent filings.

Earnings score

How profitable a bank is has an effect on its safety and soundness. Earnings may be retained by the bank, boosting its capital cushion, or be used to address problematic loans, potentially making the bank better able to withstand economic shocks. However, banks that are losing money have less ability to do those things.

On Bankrate's test of earnings, Evolve Bank & Trust scored 16 out of a possible 30, beating out the national average of 15.12.

One important way to measure a bank's earnings is return on equity, or net income (profit, basically) divided by total equity. The most recent annualized quarterly return on equity for Evolve Bank & Trust was 7.54 percent, below the national average of 8.10 percent.

The bank reported net income of $3.0 million on total equity of $40.0 million for the twelve months ended December 31, 2017. The bank experienced an annualized return on average assets, or ROA, of 0.66 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.