Safe and Sound

Graham Savings and Loan, SSB

Graham, TX
5
Star Rating
Graham, TX-based Graham Savings and Loan, SSB is an FDIC-insured bank started in 1934. As of December 31, 2017, the bank had equity of $15.2 million on $119.1 million in assets.

U.S. bank customers have $101.6 million on deposit at 3 offices in TX run by 31 full-time employees. With that footprint, the bank holds loans and leases worth $87.9 million, including real estate loans of $85.3 million.

Overall, Bankrate believes that, as of December 31, 2017, Graham Savings and Loan, SSB exhibited a superior condition, earning a full 5 stars for safety and soundness. Keep reading for a look at how the bank did on the three important criteria Bankrate used to grade American banks on safety and soundness.

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THE INSTITUTION'S SCORE

Capital Score

Capital is a crucial measurement of an institution's financial resilience. It acts as a bulwark against losses and as protection for depositors when a bank is struggling financially. When it comes to safety and soundness, more capital is preferred.

On our test to measure capital adequacy, Graham Savings and Loan, SSB achieved a score of 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. Graham Savings and Loan, SSB's Tier 1 capital ratio was 21.96 percent, exceeding the 6 percent level considered adequate by regulators, but less than the national average of 25.65 percent. A higher capital ratio means the bank will be better able to stand up to financial difficulties.

Overall, Graham Savings and Loan, SSB held equity amounting to 12.77 percent of its assets, which exceeded the national average of 12.03 percent.

Asset Quality Score

Bankrate uses this test to estimate the impact of troubled assets, such as past-due loans, on the bank's loan loss reserves and overall capitalization.

Having a large number of these types of assets suggests a bank could eventually have to use capital to cover losses, decreasing its buffer of equity. Many of those assets are also likely to be in non-accrual status and no longer earning money, pushing down earnings and elevating the risk of a failure in the future.

Graham Savings and Loan, SSB exceeded the national average of 37.49 on Bankrate's asset quality test, racking up 40 out of a possible 40 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, 0.42 percent of Graham Savings and Loan, SSB'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 maintain a reserve known as an "allowance for loan and lease losses" to deal with problem assets . 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 troubled assets. Unfortunately, the FDIC did not provide information on Graham Savings and Loan, SSB's loan loss allowance in its most recent filings.

Earnings score

How profitable a bank is affects its long-term survivability. Earnings can be retained by the bank, increasing its capital buffer, or be used to address problematic loans, potentially making the bank better prepared to withstand economic shocks. Obviously, banks that are losing money have less ability to do those things.

Graham Savings and Loan, SSB scored 16 out of a possible 30 on Bankrate's test of earnings, better than the national average of 15.12.

One key way to measure a bank's earnings is return on equity, calculated by dividing net income (profit, essentially) by total equity. The most recent annualized quarterly return on equity for Graham Savings and Loan, SSB was 8.00 percent, below the national average of 8.10 percent.

The bank earned net income of $1.2 million on total equity of $15.2 million for the twelve months ended December 31, 2017. The bank reported an annualized return on average assets, or ROA, of 1.00 percent, right at the level deemed satisfactory in accordance with industry standards, and equal to 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.