Safe and Sound

Bank of Benoit

Benoit, MS
4
Star Rating
Founded in 1904, Bank of Benoit is an FDIC-insured bank headquartered in Benoit, MS. The bank holds equity of $2.0 million on assets of $16.0 million, according to June 30, 2017, regulatory filings.

With 5 full-time employees, the bank currently holds loans and leases worth $4.3 million, including real estate loans of $1.4 million. U.S. bank customers currently have $14.0 million in deposits with the bank.

Overall, Bankrate believes that, as of June 30, 2017, Bank of Benoit exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Here's an analysis of how the bank did on the three important criteria Bankrate used to score U.S. banks.

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SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

Capital works as a buffer against losses and as protection for depositors when a bank is experiencing economic trouble. It follows then that a bank's level of capital is a key measurement of a bank's financial strength. When it comes to safety and soundness, the more capital, the better.
On our test to measure the adequacy of a bank's capital, Bank of Benoit racked up 16 out of a possible 30 points, beating out the national average of 13.38.

One way to measure this buffer is looking at a bank's Tier 1 capital ratio. Bank of Benoit's Tier 1 capital ratio was 26.75 percent, higher than the 6 percent level regulators consider adequate, and exceeding the national average of 25.16 percent. The higher the capital ratio, the better the bank will be able to stand up to financial downturns.

Overall, Bank of Benoit held equity amounting to 12.24 percent of its assets, which exceeded the national average of 12.10 percent.

Asset Quality Score

This test is intended to try to understand how the bank's reserves set aside to cover loan losses, as well as overall capitalization could be affected by troubled assets, such as unpaid mortgages.

A bank with lots of these types of assets may eventually have to use capital to cover losses, diminishing its cushion of equity. Many of those assets are also likely to be in non-accrual status and no longer earning money, decreasing earnings and elevating the risk of a failure in the future.

On Bankrate's asset quality test, Bank of Benoit scored 36 out of a possible 40 points, below the national average of 37.62 points.

A helpful indicator of asset quality is the percentage of problem assets a bank holds compared to its total assets. As of June 30, 2017, 5.13 percent of Bank of Benoit's loans were noncurrent -- in other words, 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 maintain a reserve to deal with troubled assets known as an "allowance for loan and lease losses." Comparing the the size of that reserve to the total amount of at-risk loans can be a useful indicator when evaluating a bank's ability to manage troubled assets. Unfortunately, the FDIC did not provide information on Bank of Benoit's loan loss allowance in its most recent filings.

Earnings score

How profitable a bank is has an effect on its long-term survivability. Earnings may be retained by the bank, increasing its capital buffer, or be used to address problematic loans, likely making the bank better prepared to withstand financial shocks. Losses, on the other hand, take away from a bank's ability to do those things.

Bank of Benoit scored 8 out of a possible 30 on Bankrate's earnings test, falling short of the national average of 16.52.

One important measure of a bank's earnings is return on equity, or net income (essentially profit) divided by total equity. The most recent annualized quarterly return on equity for Bank of Benoit was 3.51 percent, below the national average of 9.28 percent.

For the twelve months ended June 30, 2017, the bank earned net income of $34,000 on total equity of $2.0 million. The bank reported an annualized return on average assets, or ROA, of 0.40 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.