Safe and Sound

Robertson Banking Company

Demopolis, AL
5
Star Rating
Robertson Banking Company is a Demopolis, AL-based, FDIC-insured bank dating back to 1870. As of December 31, 2017, the bank held equity of $30.1 million on $285.7 million in assets.

With 74 full-time employees in 6 offices in AL, the bank holds loans and leases worth $228.2 million, including real estate loans of $193.1 million. U.S. bank customers currently have $245.4 million in deposits with the bank.

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

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THE INSTITUTION'S SCORE

Capital Score

Capital is a valuable measurement of a bank's financial strength. It acts as a buffer against losses and affords protection for depositors when a bank is struggling financially. From a safety and soundness perspective, the higher the capital, the better.

Robertson Banking Company came in below the national average of 13.13 on our test to measure capital adequacy, receiving a score of 12 out of a possible 30 points.

A bank's Tier 1 capital ratio is a widely used measure of this buffer. Robertson Banking Company's Tier 1 capital ratio was 13.81 percent, higher than the 6 percent level regulators consider adequate, but less than the national average of 25.65 percent. The higher the capital ratio, the better the bank will be able to stand up to economic difficulties.

Overall, Robertson Banking Company held equity amounting to 10.54 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 troubled assets, such as unpaid loans.

A bank with large numbers of these types of assets could eventually be forced to use capital to cover losses, reducing its buffer of equity. Many of those assets are also likely to be in non-accrual status and thus aren't earning money, resulting in lower earnings and potentially more risk of a future failure.

On Bankrate's asset quality test, Robertson Banking Company scored 40 out of a possible 40 points, above the national average of 37.49 points.

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, 0.03 percent of Robertson Banking Company'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 keep a reserve to handle problem assets known as an "allowance for loan and lease losses." 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 problem loans. Robertson Banking Company's loan loss allowance was 2,974.03 percent of its total noncurrent loans, higher than 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 has an effect on its long-term survivability. Earnings may be retained by the bank, expanding its capital cushion, or be used to address problematic loans, potentially making the bank better able to withstand financial shocks. However, banks that are losing money have less ability to do those things.

On Bankrate's test of earnings, Robertson Banking Company scored 22 out of a possible 30, beating out the national average of 15.12.

One important way to measure a bank's earnings is return on equity, calculated by dividing net income (profit, basically) by total equity. Robertson Banking Company's most recent annualized quarterly return on equity was 13.52 percent, above the national average of 8.10 percent.

The bank earned net income of $4.1 million on total equity of $30.1 million for the twelve months ended December 31, 2017. The bank had an annualized return on average assets, or ROA, of 1.47 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.