Safe and Sound

Jefferson Bank and Trust Company

Saint Louis, MO
4
Star Rating
Jefferson Bank and Trust Company is a Saint Louis, MO-based, FDIC-insured bank dating back to 1892. The bank holds equity of $67.5 million on assets of $610.8 million, according to December 31, 2017, regulatory filings.

Thanks to the work of 83 full-time employees in 5 offices in MO, the bank has amassed loans and leases worth $415.8 million, including $317.4 million worth of real estate loans. The bank currently holds $444.4 million in deposits from U.S. customers.

Overall, Bankrate believes that, as of December 31, 2017, Jefferson Bank and Trust Company exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Keep reading for a breakdown of how the bank fared on the three major criteria Bankrate used to grade American banks.

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THE INSTITUTION'S SCORE

Capital Score

Capital is an important measurement of an institution's financial resilience. It works as a cushion against losses and affords protection for depositors when a bank is experiencing economic trouble. When looking at safety and soundness, the higher the capital, the better.

Jefferson Bank and Trust Company scored above the national average of 13.13 points on our test to measure the adequacy of a bank's capital, racking up 14 out of a possible 30 points.

One commonly used measure of this buffer is a bank's Tier 1 capital ratio. Jefferson Bank and Trust Company's Tier 1 capital ratio was 12.29 percent, higher than the 6 percent level considered adequate by regulators, but less than the national average of 25.65 percent. A higher capital ratio suggests the bank will be better able to weather financial headwinds.

Overall, Jefferson Bank and Trust Company held equity amounting to 11.04 percent of its assets, which was lower than the national average of 12.03 percent.

Asset Quality Score

Bankrate uses this test to estimate the effect 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 large numbers of these types of assets could eventually be forced to use capital to cover losses, cutting down on its equity buffer. Many of those assets are also likely to be in non-accrual status and thus aren't earning money, resulting in reduced earnings and potentially more risk of a future failure.

Jefferson Bank and Trust Company scored 40 out of a possible 40 points on Bankrate's asset quality test, beating the national average of 37.49.

The percentage of problem assets a bank holds compared to its total assets is a widely used indicator of asset quality.As of December 31, 2017, 0.01 percent of Jefferson Bank and Trust Company'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 handle problem assets known as an "allowance for loan and lease losses." Comparing how large that reserve is to the total amount of at-risk loans can be a widely used indicator when evaluating a bank's ability to manage troubled assets. Jefferson Bank and Trust Company's loan loss allowance was 11,000.00 percent of its total noncurrent loans, above the national average. All else being equal, a higher ratio of loan loss allowance to noncurrent loans is better.

Earnings score

How profitable a bank is affects its long-term survivability. Earnings can be retained by the bank, giving a boost to its capital cushion, or be used to deal with problematic loans, likely making the bank more resilient in tough times. Conversely, losses lessen a bank's ability to do those things.

Jefferson Bank and Trust Company scored 14 out of a possible 30 on Bankrate's earnings test, lower than the national average of 15.12.

Return on equity, calculated by dividing net income (profit, essentially) by total equity, is one important way to measure a bank's earnings. Jefferson Bank and Trust Company's most recent annualized quarterly return on equity was 6.80 percent, below the national average of 8.10 percent.

For the twelve months ended December 31, 2017, the bank earned net income of $4.7 million on total equity of $67.5 million. The bank had an annualized return on average assets, or ROA, of 0.79 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.