Safe and Sound

First Oklahoma Bank

Jenks, OK
4
Star Rating
Jenks, OK-based First Oklahoma Bank is an FDIC-insured bank founded in 1923. Regulatory filings show the bank having equity of $46.2 million on $564.9 million in assets, as of December 31, 2017.

U.S. bank customers have $490.0 million on deposit at 3 offices in OK run by 121 full-time employees. With that footprint, the bank has amassed loans and leases worth $472.6 million, $389.6 million of which are for real estate.

Overall, Bankrate believes that, as of December 31, 2017, First Oklahoma Bank exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Here's a look at how the bank did on the three important criteria Bankrate used to evaluate American banks.

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THE INSTITUTION'S SCORE

Capital Score

When it comes to measuring an a bank's financial strength, capital is crucial. It works as a cushion against losses and affords protection for depositors when a bank is experiencing economic instability. When it comes to safety and soundness, the higher the capital, the better.

On our test to measure capital adequacy, First Oklahoma Bank received a score of 6 out of a possible 30 points, lower than the national average of 13.13.

One widely followed measure of this buffer is a bank's Tier 1 capital ratio. First Oklahoma Bank's Tier 1 capital ratio was 9.26 percent, exceeding the 6 percent level considered adequate by regulators, but lower than the national average of 25.65 percent. A higher capital ratio means the bank will be better able to stand up to financial challenges.

Overall, First Oklahoma Bank held equity amounting to 8.18 percent of its assets, which was lower than the national average of 12.03 percent.

Asset Quality Score

In this test, Bankrate tries to determine the effect of troubled assets, such as unpaid mortgages, on the bank's capitalization and allocated loan loss reserves.

Having extensive holdings of these kinds of assets means a bank could eventually have to use capital to absorb losses, diminishing its buffer of equity. It also means that there are likely to be many assets that are in non-accrual status and thus aren't earning money, pushing down earnings and increasing the risk of a failure in the future.

On Bankrate's asset quality test, First Oklahoma Bank 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 handy indicator of asset quality.As of December 31, 2017, 0.58 percent of First Oklahoma Bank's loans were noncurrent -- in other words, 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 maintain a reserve known as an "allowance for loan and lease losses" to deal with troubled assets . How large that reserve is can be a handy 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 First Oklahoma Bank's loan loss allowance in its most recent filings.

Earnings score

A bank's earnings performance has an effect on its safety and soundness. Earnings can be retained by the bank, increasing its capital buffer, or be used to address problematic loans, likely making the bank better prepared to withstand economic shocks. However, banks that are losing money have less ability to do those things.

On Bankrate's earnings test, First Oklahoma Bank scored 12 out of a possible 30, failing to reach the national average of 15.12.

One key way to measure 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 First Oklahoma Bank was 5.77 percent, below the national average of 8.10 percent.

The bank reported net income of $2.5 million on total equity of $46.2 million for the twelve months ended December 31, 2017. The bank reported an annualized return on average assets, or ROA, of 0.47 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.