Safe and Sound

Jefferson County Bank

Daykin, NE
5
Star Rating
Jefferson County Bank is a Daykin, NE-based, FDIC-insured bank founded in 1892. As of December 31, 2017, the bank had equity of $6.8 million on assets of $44.9 million.

With 6 full-time employees, the bank holds loans and leases worth $21.1 million, including real estate loans of $12.1 million. U.S. bank customers currently have $33.7 million in deposits with the bank.

Overall, Bankrate believes that, as of December 31, 2017, Jefferson County Bank exhibited a superior condition, earning a full 5 stars for safety and soundness. Here's a look at how the bank did on the three major criteria Bankrate used to score U.S. banks on safety and soundness.

WHAT IS
SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

When it comes to measuring an a bank's financial stability, capital is essential. It acts as a cushion against losses and affords protection for depositors during periods of financial instability for the bank. When looking at safety and soundness, more capital is better.

On our test to measure capital adequacy, Jefferson County Bank racked up 22 out of a possible 30 points, better than the national average of 13.13.

A bank's Tier 1 capital ratio is an essential measure of this buffer. Jefferson County Bank's Tier 1 capital ratio was 23.38 percent, exceeding the 6 percent level regulators consider adequate, 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, Jefferson County Bank held equity amounting to 15.06 percent of its assets, which exceeded the national average of 12.03 percent.

Asset Quality Score

This test's purpose is to try to understand how the bank's reserves set aside to cover loan losses, as well as overall capitalization, could be affected by problem assets, such as past-due mortgages.

A bank with extensive holdings of these kinds of assets may eventually have to use capital to absorb losses, shrinking its cushion of equity. Many of those assets are also likely to be in non-accrual status and no longer earning money, resulting in depressed earnings and potentially more risk of a future failure.

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

A widely used indicator of asset quality is the percentage of problem assets a bank holds compared to its total assets. As of December 31, 2017, none of Jefferson County Bank'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 troubled assets known as an "allowance for loan and lease losses." Comparing how large that reserve is to the total amount of problematic loans can be a useful indicator when evaluating a bank's ability to manage troubled assets. Unfortunately, the FDIC did not provide information on Jefferson County Bank's loan loss allowance in its most recent filings.

Earnings score

A bank's profitability has an effect on its safety and soundness. A bank can retain its earnings, boosting its capital cushion, or use them to deal with problematic loans, likely making the bank better able to withstand economic trouble. However, banks that are losing money are less able to do those things.

Jefferson County Bank scored 18 out of a possible 30 on Bankrate's test of earnings, better than the national average of 15.12.

Return on equity, calculated by dividing net income (profit, basically) by total equity, is one important way to measure a bank's earnings. Jefferson County Bank's most recent annualized quarterly return on equity was 9.22 percent, above the national average of 8.10 percent.

For the twelve months ended December 31, 2017, the bank earned net income of $604,000 on total equity of $6.8 million. The bank had an annualized return on average assets, or ROA, of 1.41 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.