Safe and Sound

Yampa Valley Bank

Steamboat Spring, CO
5
Star Rating
Yampa Valley Bank is an FDIC-insured bank founded in 2000 and currently headquartered in Steamboat Spring, CO. As of December 31, 2017, the bank had equity of $25.3 million on assets of $276.9 million.

With 53 full-time employees in 2 offices in CO, the bank currently holds loans and leases worth $220.6 million, including real estate loans of $188.8 million. U.S. bank customers currently have $250.2 million in deposits with the bank.

Overall, Bankrate believes that, as of December 31, 2017, Yampa Valley 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 key criteria Bankrate used to grade American banks on safety and soundness.

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THE INSTITUTION'S SCORE

Capital Score

Capital is a key measurement of an institution's financial fortitude. It acts as a buffer against losses and affords protection for accountholders when a bank is experiencing economic trouble. When it comes to safety and soundness, the more capital, the better.

Yampa Valley Bank received a score of 10 out of a possible 30 points on our test to measure the adequacy of a bank's capital, less than the national average of 13.13.

One widely followed measure of this buffer is a bank's Tier 1 capital ratio. Yampa Valley Bank's Tier 1 capital ratio was 10.96 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, Yampa Valley Bank held equity amounting to 9.14 percent of its assets, which was lower than the national average of 12.03 percent.

Asset Quality Score

In this test, Bankrate tries to determine the impact of problem assets, such as past-due loans, on the bank's capitalization and allocated loan loss reserves.

Having lots of these types of assets means a bank may eventually have to use capital to cover losses, decreasing its buffer of equity. It also means that there are likely to be many assets that are in non-accrual status and thus aren't earning money, resulting in diminished earnings and potentially more risk of a failure in the future.

On Bankrate's test of asset quality, Yampa Valley Bank scored 40 out of a possible 40 points, better than the national average of 37.49 points.

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, 0.81 percent of Yampa Valley 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 maintain a reserve known as an "allowance for loan and lease losses" to deal with problem assets . Comparing how large that reserve is to the total amount of problem loans can be a handy indicator when evaluating a bank's ability to manage problem assets. Unfortunately, the FDIC did not provide information on Yampa Valley Bank's loan loss allowance in its most recent filings.

Earnings score

How profitable a bank is affects its safety and soundness. A bank can retain its earnings, increasing its capital cushion, or use them to address problematic loans, potentially making the bank better prepared to withstand economic shocks. Conversely, losses lessen a bank's ability to do those things.

On Bankrate's earnings test, Yampa Valley Bank scored 30 out of a possible 30, beating the national average of 15.12.

One widely used way to measure a bank's earnings is return on equity, calculated by dividing net income (profit, essentially) by the total amount of equity. Yampa Valley Bank's most recent annualized quarterly return on equity was 25.35 percent, above the national average of 8.10 percent.

For the twelve months ended December 31, 2017, the bank recorded net income of $6.0 million on total equity of $25.3 million. The bank experienced an annualized return on average assets, or ROA, of 2.28 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.