Devon Bank Review - March 2011

Texas Ratio - Two Stars (out of Five)

The Texas Ratio is an indicator of how much funds a bank has available compared to the total value of loans considered at risk. As of March 31, 2011 Devon Bank had $24.58 million in non-current loans and owned real-estate with $32.74 million in equity and loan loss allowances on hand to cover it. This gives Devon Bank a Texas Ratio of 75.05% which is below average. Any bank with a Texas Ratio near or greater than 100% is considered at risk.

Texas Ratio Trend - Two Stars (out of Five)

The Texas Ratio for Devon Bank increased slightly from 50.30% as of March 31, 2010 to 75.05% as of March 31, 2011, resulting in a negative change of 49.21%. This indicates that the balance sheet and financial strength for Devon Bank has declined slightly in recent periods.

Deposit Growth - Two Stars (out of Five)

In the past year, Devon Bank has decreased its total deposits by -$3.6 million, resulting in -1.4% growth for the year. A strong track record of growth is an indicator of consumer confidence and the bank's ability to strengthen its balance sheet. The growth Devon Bank has shown is below average.

Capitalization - Four Stars (out of Five)

Both FDIC and NCUA consider capitalization levels of banks and credit unions to be of high importance. Higher capitalization allows for a greater buffer when cover loans that may fail in the future. Devon Bank has $281.46 million in assets with $32.74 million in equity, resulting in a capitalization level of 11.63%, which is above average.

PREDICTIVE INDICATOR

As stated, we have determined a composite Star rating for this bank of 1*, indicative of a significantly below average financial condition. At times, financial conditions of banks change rapidly and significantly. Hence, our Safe & Sound Star ratings should not be deemed predictive of likely future ratings. However, in view of early warning indicators set forth within this report, in combination with the institution's financial data, we believe that the Star rating for this institution is unlikely to change within the ensuing twelve month period.