Safe and Sound

Valley Bank & Trust

Brighton, CO
4
Star Rating
Brighton, CO-based Valley Bank & Trust is an FDIC-insured bank started in 1978. Regulatory filings show the bank having equity of $31.2 million on $314,187,000 in assets, as of June 30, 2017.

With 82 full-time employees in 7 offices in CO, the bank currently holds loans and leases worth $169.3 million, including real estate loans of $134.3 million. U.S. bank customers currently have $280.6 million in deposits with the bank.

Overall, Bankrate believes that, as of June 30, 2017, Valley Bank & Trust exhibited a superior condition, earning a full 5 stars for safety and soundness. Keep reading for an analysis of how the bank faired on the three major criteria Bankrate used to grade American banks on safety and soundness.

WHAT IS
SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

Capital is an essential measurement of an institution's financial resilience. It acts as a buffer against losses and provides protection for depositors during times of economic trouble for the bank. When it comes to safety and soundness, the higher the capital, the better.
Valley Bank & Trust fell short of the national average of 13.38 on our test to measure the adequacy of a bank's capital, achieving a score of 10 out of a possible 30 points.

One commonly used measure of this buffer is a bank's Tier 1 capital ratio. Valley Bank & Trust's Tier 1 capital ratio was 14.08 percent, above the 6 percent level considered adequate by regulators, but lower than the national average of 25.16 percent. A higher capital ratio suggests the bank will be better able to weather economic challenges.

Overall, Valley Bank & Trust held equity amounting to 9.94 percent of its assets, which was lower than the national average of 12.10 percent.

Asset Quality Score

In this test, Bankrate tries to estimate the impact of troubled assets, such as past-due mortgages, on the bank's loan loss reserves and overall capitalization.

A bank with lots of these types of assets may eventually be required to use capital to absorb losses, cutting down on its equity buffer. Many of those assets are also likely to be in non-accrual status and thus aren't earning money, decreasing earnings and increasing the chances of a future failure.

On Bankrate's asset quality test, Valley Bank & Trust scored 36 out of a possible 40 points, less than the national average of 37.62 points.

A widely used indicator of asset quality is the percentage of problem assets a bank holds compared to its total assets. As of June 30, 2017, 1.38 percent of Valley Bank & Trust's loans were noncurrent, meaning they were more than 90 days past due or were in non-accrual status. That's above the national average of 1.04 percent.

Banks keep a reserve known as an "allowance for loan and lease losses" to deal with problem assets . The size of that reserve can be a helpful indicator when evaluating a bank's ability to manage troubled assets, especially when compared to the total amount of problem loans. Unfortunately, the FDIC did not provide information on Valley Bank & Trust's loan loss allowance in its most recent filings.

Earnings score

How profitable a bank is affects its safety and soundness. Earnings may be retained by the bank, boosting its capital buffer, or be used to deal with 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.

Valley Bank & Trust received above-average marks on Bankrate's test of earnings, achieving a score of 26 out of a possible 30.

Return on equity, calculated by dividing net income (profit, essentially) by total equity, is one important measure of a bank's earnings. Valley Bank & Trust's most recent annualized quarterly return on equity was 18.41 percent, above the national average of 9.28 percent.

The bank recorded net income of $2.6 million on total equity of $31.2 million for the twelve months ended June 30, 2017. The bank reported an annualized return on average assets, or ROA, of 1.66 percent, above the 1 percent deemed satisfactory in accordance with industry standards, and above the average for U.S. banks of 1.14 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.