Safe and Sound

The Lytle State Bank of Lytle, Texas

Lytle, TX
5
Star Rating
The Lytle State Bank of Lytle, Texas is a Lytle, TX-based, FDIC-insured bank dating back to 1910. The bank holds equity of $13.7 million on $88.7 million in assets, according to December 31, 2017, regulatory filings.

With 22 full-time employees, the bank has amassed loans and leases worth $27.6 million, including real estate loans of $5.7 million. U.S. bank customers currently have $73.3 million in deposits with the bank.

Overall, Bankrate believes that, as of December 31, 2017, The Lytle State Bank of Lytle, Texas exhibited a superior condition, earning a full 5 stars for safety and soundness. Here's an analysis of how the bank fared on the three important criteria Bankrate used to evaluate U.S. banks on safety and soundness.

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THE INSTITUTION'S SCORE

Capital Score

Capital works as a cushion against losses and as protection for account holders during periods of economic instability for the bank. Therefore, a bank's level of capital is an important measurement of an institution's financial strength. When looking at safety and soundness, more capital is better.

The Lytle State Bank of Lytle, Texas exceeded the national average of 13.13 points on our test to measure capital adequacy, scoring 22 out of a possible 30 points.

One way to measure this buffer is looking at a bank's Tier 1 capital ratio. The Lytle State Bank of Lytle, Texas's Tier 1 capital ratio was 35.40 percent, above the 6 percent level considered adequate by regulators, and higher than 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 Lytle State Bank of Lytle, Texas held equity amounting to 15.44 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 capitalization and allocated loan loss reserves could be affected by troubled assets, such as unpaid loans.

Having extensive holdings of these kinds of assets may eventually force a bank to use capital to cover losses, cutting down on its cushion of equity. 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, decreasing earnings and elevating the risk of a future failure.

The Lytle State Bank of Lytle, Texas exceeded the national average of 37.49 on Bankrate's asset quality test, racking up 40 out of a possible 40 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, 1.98 percent of The Lytle State Bank of Lytle, Texas's loans were noncurrent -- in other words, 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 keep a reserve to deal with troubled assets known as an "allowance for loan and lease losses." That reserve's size 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 The Lytle State Bank of Lytle, Texas's loan loss allowance in its most recent filings.

Earnings score

How profitable a bank is affects its safety and soundness. Earnings can be retained by the bank, giving a boost to its capital cushion, or be used to deal with problematic loans, potentially making the bank more resilient in times of trouble. Losses, on the other hand, reduce a bank's ability to do those things.

The Lytle State Bank of Lytle, Texas scored 10 out of a possible 30 on Bankrate's test of earnings, coming in below the national average of 15.12.

Return on equity, calculated by dividing net income (profit, essentially) by the total amount of equity, is one important measure of a bank's earnings. The most recent annualized quarterly return on equity for The Lytle State Bank of Lytle, Texas was 4.24 percent, below the national average of 8.10 percent.

The bank earned net income of $590,000 on total equity of $13.7 million for the twelve months ended December 31, 2017. The bank had an annualized return on average assets, or ROA, of 0.69 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.