Safe and Sound

Shelby Savings Bank, SSB

Center, TX
5
Star Rating
Center, TX-based Shelby Savings Bank, SSB is an FDIC-insured bank founded in 1979. The bank holds equity of $36.0 million on assets of $287.0 million, according to December 31, 2017, regulatory filings.

Thanks to the work of 85 full-time employees in 5 offices in TX, the bank has amassed loans and leases worth $210.8 million, including $152.5 million worth of real estate loans. U.S. bank customers currently have $228.7 million in deposits with the bank.

Overall, Bankrate believes that, as of December 31, 2017, Shelby Savings Bank, SSB exhibited a superior condition, earning a full 5 stars for safety and soundness. Keep reading for a breakdown of how the bank fared on the three major criteria Bankrate used to evaluate American banks on safety and soundness.

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SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

When it comes to measuring an a bank's financial fortitude, capital is useful. It works as a buffer against losses and provides protection for depositors when a bank is experiencing economic trouble. From a safety and soundness perspective, more capital is better.

Shelby Savings Bank, SSB exceeded the national average of 13.13 points on our test to measure the adequacy of a bank's capital, racking up 16 out of a possible 30 points.

One widely followed measure of this buffer is a bank's Tier 1 capital ratio. Shelby Savings Bank, SSB's Tier 1 capital ratio was 15.93 percent, exceeding the 6 percent level considered adequate by regulators, but under the national average of 25.65 percent. The higher the capital ratio, the better the bank will be able to weather financial headwinds.

Overall, Shelby Savings Bank, SSB held equity amounting to 12.54 percent of its assets, which exceeded the national average of 12.03 percent.

Asset Quality Score

This test is intended to estimate 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 loans.

A bank with extensive holdings of these types of assets may eventually be forced to use capital to absorb losses, decreasing its cushion of equity. It also means that there are likely to be many assets that are in non-accrual status and no longer earning money, resulting in lower earnings and potentially more risk of a future failure.

Shelby Savings Bank, SSB scored 40 out of a possible 40 points on Bankrate's asset quality test, above 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, 0.37 percent of Shelby Savings Bank, SSB'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." How large that reserve is can be a handy 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 Shelby Savings Bank, SSB's loan loss allowance in its most recent filings.

Earnings score

A bank's profitability affects its safety and soundness. Earnings can be retained by the bank, boosting its capital buffer, or be used to deal with problematic loans, potentially making the bank better able to withstand financial trouble. Losses, on the other hand, diminish a bank's ability to do those things.

Shelby Savings Bank, SSB scored 20 out of a possible 30 on Bankrate's earnings test, exceeding the national average of 15.12.

One widely used way to measure a bank's earnings is return on equity, or net income (essentially profit) divided by total equity. The most recent annualized quarterly return on equity for Shelby Savings Bank, SSB was 11.19 percent, above the national average of 8.10 percent.

The bank reported net income of $3.9 million on total equity of $36.0 million for the twelve months ended December 31, 2017. The bank had an annualized return on average assets, or ROA, of 1.33 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.