Safe and Sound

Stockmans Bank

Altus, OK
5
Star Rating
Stockmans Bank is an Altus, OK-based, FDIC-insured bank that opened its doors in 1910. As of December 31, 2017, the bank had equity of $21.2 million on assets of $233.9 million.

Thanks to the work of 60 full-time employees in 6 offices in multiple states, the bank holds loans and leases worth $211.3 million, $132.0 million of which are for real estate. The bank currently holds $201.5 million in deposits from U.S. customers.

Overall, Bankrate believes that, as of December 31, 2017, Stockmans Bank 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 major criteria Bankrate used to score American banks on safety and soundness.

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THE INSTITUTION'S SCORE

Capital Score

When it comes to measuring an an institution's financial resilience, capital is essential. It works as a bulwark against losses and affords protection for depositors during periods of financial trouble for the bank. From a safety and soundness perspective, the higher the capital, the better.

On our test to measure capital adequacy, Stockmans Bank received a score of 10 out of a possible 30 points, less than the national average of 13.13.

One essential measure of this buffer is a bank's Tier 1 capital ratio. Stockmans Bank's Tier 1 capital ratio was 11.04 percent, exceeding 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 downturns.

Overall, Stockmans Bank held equity amounting to 9.06 percent of its assets, which was lower than the national average of 12.03 percent.

Asset Quality Score

Bankrate uses this test to estimate the effect of troubled assets, such as unpaid loans, on the bank's capitalization and allocated loan loss reserves.

Having extensive holdings of these types of assets suggests a bank may have to use capital to cover 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, decreasing earnings and increasing the risk of a future failure.

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

The percentage of problem assets a bank holds compared to its total assets is a useful indicator of asset quality.As of December 31, 2017, 0.80 percent of Stockmans Bank'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 known as an "allowance for loan and lease losses" to deal with troubled assets . How large that reserve is can be a useful indicator when evaluating a bank's ability to manage problem assets, especially when compared to the total amount of problematic loans. Unfortunately, the FDIC did not provide information on Stockmans Bank's loan loss allowance in its most recent filings.

Earnings score

A bank's profitability affects its long-term survivability. A bank can retain its earnings, boosting its capital cushion, or put them to work addressing problematic loans, likely making the bank better prepared to withstand financial trouble. Banks that are losing money, however, are less able to do those things.

Stockmans Bank scored 26 out of a possible 30 on Bankrate's earnings test, above the national average of 15.12.

Return on equity, calculated by dividing net income (essentially, profit) by the total amount of equity, is one important measure of a bank's earnings. Stockmans Bank's most recent annualized quarterly return on equity was 18.71 percent, above the national average of 8.10 percent.

The bank earned net income of $3.6 million on total equity of $21.2 million for the twelve months ended December 31, 2017. The bank reported an annualized return on average assets, or ROA, of 1.60 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.