Safe and Sound

North Dallas Bank & Trust Co.

Dallas, TX
4
Star Rating
Founded in 1961, North Dallas Bank & Trust Co. is an FDIC-insured bank based in Dallas, TX. As of December 31, 2017, the bank had equity of $143.5 million on $1.37 billion in assets.

Thanks to the efforts of 152 full-time employees in 6 offices in TX, the bank holds loans and leases worth $614.5 million, including real estate loans of $536.7 million. The bank currently holds $1.22 billion in deposits from U.S. customers.

Overall, Bankrate believes that, as of December 31, 2017, North Dallas Bank & Trust Co. exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Keep reading for an analysis of how the bank did on the three important criteria Bankrate used to grade American banks.

WHAT IS
SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

Capital works as a bulwark against losses and affords protection for account holders during times of economic trouble for the bank. It follows then that a bank's level of capital is a key measurement of a bank's financial resilience. When looking at safety and soundness, the higher the capital, the better.

On our test to measure capital adequacy, North Dallas Bank & Trust Co. received a score of 12 out of a possible 30 points, lower than the national average of 13.13.

A bank's Tier 1 capital ratio is a widely used measure of this buffer. North Dallas Bank & Trust Co.'s Tier 1 capital ratio was 24.38 percent, above the 6 percent level regulators consider adequate, but less than the national average of 25.65 percent. A higher capital ratio means the bank will be better able to weather economic headwinds.

Overall, North Dallas Bank & Trust Co. held equity amounting to 10.44 percent of its assets, which was lower than the national average of 12.03 percent.

Asset Quality Score

This test is intended to try to understand how the bank's loan loss reserves and overall capitalization could be affected by problem assets, such as past-due loans.

Having extensive holdings of these kinds of assets may eventually force a bank to use capital to cover losses, decreasing its equity cushion. It also means that there are likely to be many assets that are in non-accrual status and thus aren't earning interest for the bank, reducing earnings and increasing the risk of a future failure.

North Dallas Bank & Trust Co. scored 40 out of a possible 40 points on Bankrate's asset quality test, exceeding the national average of 37.49.

The percentage of problem assets a bank holds compared to its total assets is a helpful indicator of asset quality.As of December 31, 2017, 0.11 percent of North Dallas Bank & Trust Co.'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 . The size of that reserve can be a widely used indicator when evaluating a bank's ability to manage troubled assets, especially when compared to the total amount of problematic loans. North Dallas Bank & Trust Co.'s loan loss allowance was 1,724.51 percent of its total noncurrent loans, higher than the national average. All things being equal, the higher the ratio of loan loss allowance to noncurrent loans, the better.

Earnings score

How profitable a bank is affects its long-term survivability. Earnings may be retained by the bank, expanding its capital buffer, or be used to deal with problematic loans, potentially making the bank better able to withstand economic shocks. Conversely, losses lessen a bank's ability to do those things.

On Bankrate's earnings test, North Dallas Bank & Trust Co. scored 10 out of a possible 30, less than the national average of 15.12.

One key measure of a bank's earnings is return on equity, or net income (profit, essentially) divided by the total amount of equity. North Dallas Bank & Trust Co.'s most recent annualized quarterly return on equity was 4.43 percent, below the national average of 8.10 percent.

For the twelve months ended December 31, 2017, the bank reported net income of $6.4 million on total equity of $143.5 million. The bank experienced an annualized return on average assets, or ROA, of 0.46 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.