Safe and Sound

The Colorado Bank and Trust Company of La Junta

La Junta, CO
4
Star Rating
La Junta, CO-based The Colorado Bank and Trust Company of La Junta is an FDIC-insured bank founded in 1907. Regulatory filings show the bank having equity of $10.2 million on assets of $129.3 million, as of December 31, 2017.

Thanks to the efforts of 38 full-time employees in 2 offices in CO, the bank holds loans and leases worth $67.8 million, including real estate loans of $42.8 million. U.S. bank customers currently have $117.7 million in deposits with the bank.

Overall, Bankrate believes that, as of December 31, 2017, The Colorado Bank and Trust Company of La Junta exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Keep reading for a look at how the bank did on the three key criteria Bankrate used to score U.S. banks.

WHAT IS
SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

Capital works as a bulwark against losses and affords protection for account holders when a bank is experiencing economic instability. Therefore, a bank's level of capital is a key measurement of an institution's financial resilience. When looking at safety and soundness, the more capital, the better.

The Colorado Bank and Trust Company of La Junta received a score of 6 out of a possible 30 points on our test to measure capital adequacy, coming in below the national average of 13.13.

A bank's Tier 1 capital ratio is a widely followed measure of this buffer. The Colorado Bank and Trust Company of La Junta's Tier 1 capital ratio was 14.65 percent, higher than the 6 percent level regulators consider adequate, but below the national average of 25.65 percent. The higher the capital ratio, the better the bank will be able to weather economic challenges.

Overall, The Colorado Bank and Trust Company of La Junta held equity amounting to 7.87 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 impact of problem assets, such as past-due loans, on the bank's capitalization and allocated loan loss reserves.

Having extensive holdings of these types of assets could eventually require a bank to use capital to absorb losses, shrinking its equity buffer. Many of those assets are also likely to be in non-accrual status and thus aren't earning money, resulting in diminished earnings and potentially more risk of a future failure.

The Colorado Bank and Trust Company of La Junta scored 40 out of a possible 40 points on Bankrate's asset quality test, beating the national average of 37.49.

The percentage of problem assets a bank holds compared to its total assets is a helpful indicator of asset quality.As of December 31, 2017, 0.79 percent of The Colorado Bank and Trust Company of La Junta'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 deal with problem assets known as an "allowance for loan and lease losses." The size of that reserve can be a widely used 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 The Colorado Bank and Trust Company of La Junta'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, increasing its capital buffer, or be used to address problematic loans, likely making the bank better prepared to withstand economic shocks. Banks that are losing money, however, have less ability to do those things.

The Colorado Bank and Trust Company of La Junta fell behind the national average on Bankrate's earnings test, achieving a score of 14 out of a possible 30.

Return on equity, calculated by dividing net income (essentially, profit) by the total amount of equity, is one key measure of a bank's earnings. The Colorado Bank and Trust Company of La Junta's most recent annualized quarterly return on equity was 6.53 percent, below the national average of 8.10 percent.

The bank recorded net income of $658,000 on total equity of $10.2 million for the twelve months ended December 31, 2017. The bank had an annualized return on average assets, or ROA, of 0.50 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.