Safe and Sound

One American Bank

4
Star Rating
Founded in 1883, One American Bank is an FDIC-insured bank headquartered in Centerville, SD. As of December 31, 2017, the bank had equity of $14.1 million on assets of $82.0 million.

With 26 full-time employees in 3 offices in SD, the bank has amassed loans and leases worth $62.8 million, including real estate loans of $33.4 million. U.S. bank customers currently have $66.0 million in deposits with the bank.

Overall, Bankrate believes that, as of December 31, 2017, One American Bank exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Here's a breakdown of how the bank fared on the three major criteria Bankrate used to evaluate American banks.

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THE INSTITUTION'S SCORE

Capital Score

Capital is an essential measurement of an institution's financial strength. It acts as a buffer against losses and as protection for depositors during periods of financial instability for the bank. When it comes to safety and soundness, more capital is preferred.

On our test to measure the adequacy of a bank's capital, One American Bank scored 26 out of a possible 30 points, above the national average of 13.13.

One way to measure this buffer is looking at a bank's Tier 1 capital ratio. One American Bank's Tier 1 capital ratio was 18.12 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 stand up to economic difficulties.

Overall, One American Bank held equity amounting to 17.23 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 capitalization and allocated loan loss reserves could be affected by problem assets, such as unpaid loans.

Having lots of these kinds of assets suggests a bank could have to use capital to cover losses, diminishing 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 chances of a future failure.

One American Bank scored 36 out of a possible 40 points on Bankrate's test of asset quality, lower than the national average of 37.49.

A useful indicator of asset quality is the percentage of problem assets a bank holds compared to its total assets. As of December 31, 2017, 2.78 percent of One American Bank's loans were noncurrent, meaning 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 maintain a reserve known as an "allowance for loan and lease losses" to deal with troubled 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 problematic loans. Unfortunately, the FDIC did not provide information on One American Bank's loan loss allowance in its most recent filings.

Earnings score

A bank's profitability affects its long-term survivability. Earnings can be retained by the bank, expanding its capital cushion, or be used to address problematic loans, potentially making the bank better prepared to withstand economic shocks. Losses, on the other hand, take away from a bank's ability to do those things.

One American Bank scored 0 out of a possible 30 on Bankrate's test of earnings, falling short of the national average of 15.12.

One important way to measure a bank's earnings is return on equity, or net income (profit, basically) divided by total equity. One American Bank's most recent annualized quarterly return on equity was -6.53 percent, below the national average of 8.10 percent.

The bank earned net income of $-968,000 on total equity of $14.1 million for the twelve months ended December 31, 2017. The bank reported an annualized return on average assets, or ROA, of -1.13 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.