Safe and Sound

The Waggoner National Bank of Vernon

Vernon, TX
5
Star Rating
The Waggoner National Bank of Vernon is an FDIC-insured bank started in 1899 and currently based in Vernon, TX. As of December 31, 2017, the bank held equity of $37.1 million on assets of $285.2 million.

Thanks to the work of 62 full-time employees in 2 offices in TX, the bank has amassed loans and leases worth $184.8 million, including $132.4 million worth of real estate loans. The bank currently holds $237.8 million in deposits from U.S. customers.

Overall, Bankrate believes that, as of December 31, 2017, The Waggoner National Bank of Vernon exhibited a superior condition, earning a full 5 stars for safety and soundness. Keep reading for a look at how the bank fared on the three major criteria Bankrate used to grade U.S. banks on safety and soundness.

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THE INSTITUTION'S SCORE

Capital Score

Capital works as a buffer against losses and affords protection for depositors when a bank is experiencing economic trouble. It follows then that a bank's level of capital is an essential measurement of an institution's financial fortitude. From a safety and soundness perspective, more capital is preferred.

The Waggoner National Bank of Vernon did better than the national average of 13.13 points on our test to measure capital adequacy, scoring 18 out of a possible 30 points.

One way to measure this buffer is looking at a bank's Tier 1 capital ratio. The Waggoner National Bank of Vernon's Tier 1 capital ratio was 16.96 percent, above 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 weather financial difficulties.

Overall, The Waggoner National Bank of Vernon held equity amounting to 13.00 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 loan loss reserves and overall capitalization could be affected by troubled assets, such as past-due loans.

Having lots of these types of assets may eventually require a bank to use capital to absorb losses, decreasing its equity cushion. Many of those assets are also likely to be in non-accrual status and thus aren't earning interest for the bank, reducing earnings and elevating the chances of a failure in the future.

On Bankrate's asset quality test, The Waggoner National Bank of Vernon scored 40 out of a possible 40 points, exceeding the national average of 37.49 points.

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, 0.51 percent of The Waggoner National Bank of Vernon'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 maintain a reserve to handle problem assets known as an "allowance for loan and lease losses." How large that reserve is can be a widely used indicator when evaluating a bank's ability to manage problem assets, especially when compared to the total amount of problem loans. Unfortunately, the FDIC did not provide information on The Waggoner National Bank of Vernon's loan loss allowance in its most recent filings.

Earnings score

How profitable a bank is affects its long-term survivability. Earnings may be retained by the bank, increasing its capital cushion, or be used to address problematic loans, potentially making the bank better prepared to withstand economic trouble. Conversely, losses diminish a bank's ability to do those things.

The Waggoner National Bank of Vernon received above-average marks on Bankrate's earnings test, achieving a score of 30 out of a possible 30.

Return on equity, calculated by dividing net income (profit, basically) by total equity, is one important way to measure a bank's earnings. The Waggoner National Bank of Vernon's most recent annualized quarterly return on equity was 21.16 percent, above the national average of 8.10 percent.

The bank reported net income of $7.7 million on total equity of $37.1 million for the twelve months ended December 31, 2017. The bank reported an annualized return on average assets, or ROA, of 2.70 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.