Safe and Sound

Avon Co-operative Bank

Avon, MA
3
Star Rating
Founded in 1914, Avon Co-operative Bank is an FDIC-insured bank headquartered in Avon, MA. As of June 30, 2017, the bank held equity of $9.3 million on $87,627,000 in assets.

With 13 full-time employees, the bank currently holds loans and leases worth $64.3 million, including real estate loans of $64.2 million. U.S. bank customers currently have $75.2 million in deposits with the bank.

Overall, Bankrate believes that, as of June 30, 2017, Avon Co-operative Bank exhibited a generally satisfactory condition, earning 3 out of 5 stars for safety and soundness. Here's an analysis of how the bank faired on the three key criteria Bankrate used to evaluate American banks.

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THE INSTITUTION'S SCORE

Capital Score

Capital acts as a buffer against losses and as protection for accountholders during times of financial instability for the bank. It follows then that when it comes to measuring an an institution's financial resilience, capital is useful. When it comes to safety and soundness, more capital is better.
Avon Co-operative Bank received a score of 12 out of a possible 30 points on our test to measure capital adequacy, coming in below the national average of 13.38.

A bank's Tier 1 capital ratio is a widely followed measure of this buffer. Avon Co-operative Bank's Tier 1 capital ratio was 21.09 percent, above the 6 percent level considered adequate by regulators, but below the national average of 25.16 percent. A higher capital ratio suggests the bank will be better able to stand up to economic downturns.

Overall, Avon Co-operative Bank held equity amounting to 10.64 percent of its assets, which was lower than the national average of 12.10 percent.

Asset Quality Score

This test's purpose is to try to understand how the bank's loan loss reserves and overall capitalization could be affected by problem assets, such as past-due loans.

Having lots of these types of assets may eventually force a bank to use capital to cover losses, diminishing 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 interest for the bank, pushing down earnings and elevating the chances of a future failure.

Avon Co-operative Bank beat out the national average of 37.62 on Bankrate's test of asset quality, racking up 40 out of a possible 40 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, none of Avon Co-operative Bank'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 1.04 percent.

Banks keep a reserve known as an "allowance for loan and lease losses" to deal with troubled assets . Comparing the that reserve's size to the total amount of problematic loans can be a useful indicator when evaluating a bank's ability to manage problem assets. Unfortunately, the FDIC did not provide information on Avon Co-operative Bank's loan loss allowance in its most recent filings.

Earnings score

How profitable a bank is has an effect on its long-term survivability. A bank can retain its earnings, expanding its capital buffer, or put them to work addressing problematic loans, likely making the bank better able to withstand financial shocks. Losses, on the other hand, lessen a bank's ability to do those things.

On Bankrate's earnings test, Avon Co-operative Bank scored 2 out of a possible 30, falling short of the national average of 16.52.

One widely used measure of a bank's earnings is return on equity, calculated by dividing net income (profit, essentially) by total equity. Avon Co-operative Bank's most recent annualized quarterly return on equity was 0.48 percent, below the national average of 9.28 percent.

For the twelve months ended June 30, 2017, the bank recorded net income of $22,000 on total equity of $9.3 million. The bank experienced an annualized return on average assets, or ROA, of 0.05 percent, below the 1 percent deemed satisfactory in accordance with industry standards and below 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.