Safe and Sound

Oklahoma Bank and Trust Company

Clinton, OK
5
Star Rating
Oklahoma Bank and Trust Company is an FDIC-insured bank founded in 1908 and currently headquartered in Clinton, OK. As of December 31, 2017, the bank held equity of $23.2 million on assets of $156.3 million.

U.S. bank customers have $128.2 million on deposit at 4 offices in OK run by 31 full-time employees. With that footprint, the bank has amassed loans and leases worth $74.4 million, including real estate loans of $50.7 million.

Overall, Bankrate believes that, as of December 31, 2017, Oklahoma Bank and Trust Company exhibited a superior condition, earning a full 5 stars for safety and soundness. Here's an analysis of how the bank fared on the three key criteria Bankrate used to evaluate U.S. banks on safety and soundness.

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THE INSTITUTION'S SCORE

Capital Score

Capital works as a buffer against losses and provides protection for depositors during times of financial trouble for the bank. It follows then that a bank's level of capital is a valuable measurement of a bank's financial strength. When it comes to safety and soundness, the more capital, the better.

Oklahoma Bank and Trust Company exceeded the national average of 13.13 points on our test to measure capital adequacy, receiving a score of 20 out of a possible 30 points.

A bank's Tier 1 capital ratio is an essential measure of this buffer. Oklahoma Bank and Trust Company's Tier 1 capital ratio was 27.91 percent, exceeding the 6 percent level considered adequate by regulators, and above the national average of 25.65 percent. A higher capital ratio suggests the bank will be better able to stand up to financial headwinds.

Overall, Oklahoma Bank and Trust Company held equity amounting to 14.85 percent of its assets, which exceeded the national average of 12.03 percent.

Asset Quality Score

This test's purpose is to estimate how the bank's capitalization and allocated loan loss reserves could be affected by problem assets, such as unpaid loans.

Having large numbers of these kinds of assets means a bank could have to use capital to cover losses, shrinking its buffer of equity. Many of those assets are also likely to be in non-accrual status and thus aren't earning money, reducing earnings and elevating the risk of a future failure.

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

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, 1.38 percent of Oklahoma Bank and Trust Company's loans were noncurrent -- in other words, they were more than 90 days past due or were in non-accrual status. That's above the national average of 1.01 percent.

Banks keep a reserve known as an "allowance for loan and lease losses" to deal with problem assets . That reserve's size can be a widely used indicator when evaluating a bank's ability to manage troubled assets, especially when compared to the total amount of at-risk loans. Unfortunately, the FDIC did not provide information on Oklahoma Bank and Trust Company's loan loss allowance in its most recent filings.

Earnings score

How profitable a bank is has an effect on its safety and soundness. Earnings may be retained by the bank, giving a boost to its capital cushion, or be used to address problematic loans, potentially making the bank better able to withstand economic trouble. Banks that are losing money, however, have less ability to do those things.

Oklahoma Bank and Trust Company exceeded the national average on Bankrate's test of earnings, achieving a score of 18 out of a possible 30.

Return on equity, calculated by dividing net income (profit, basically) by the total amount of equity, is one important way to measure a bank's earnings. The most recent annualized quarterly return on equity for Oklahoma Bank and Trust Company was 9.78 percent, above the national average of 8.10 percent.

The bank recorded net income of $2.3 million on total equity of $23.2 million for the twelve months ended December 31, 2017. The bank reported an annualized return on average assets, or ROA, of 1.43 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.