Safe and Sound

The National Bank of Blacksburg

Blacksburg, VA
5
Star Rating
The National Bank of Blacksburg is a Blacksburg, VA-based, FDIC-insured bank that opened its doors in 1891. The bank has equity of $182.2 million on assets of $1.26 billion, according to June 30, 2017, regulatory filings.

U.S. bank customers have $1.06 billion on deposit at 26 offices in VA run by 210 full-time employees. With that footprint, the bank currently holds loans and leases worth $646.9 million, including $528.9 million worth of real estate loans.

Overall, Bankrate believes that, as of June 30, 2017, The National Bank of Blacksburg 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.

WHAT IS
SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

Capital acts as a cushion against losses and provides protection for accountholders during times of financial trouble for the bank. It follows then that a bank's level of capital is an essential measurement of a bank's financial strength. When it comes to safety and soundness, the more capital, the better.
The National Bank of Blacksburg scored above the national average of 13.38 points on our test to measure the adequacy of a bank's capital, achieving a score of 20 out of a possible 30 points.

One way to measure this buffer is looking at a bank's Tier 1 capital ratio. The National Bank of Blacksburg's Tier 1 capital ratio was 23.84 percent, above the 6 percent level regulators consider adequate, but lower than the national average of 25.16 percent. A higher capital ratio suggests the bank will be better able to weather economic downturns.

Overall, The National Bank of Blacksburg held equity amounting to 14.51 percent of its assets, which exceeded 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 unpaid loans.

Having extensive holdings of these kinds of assets suggests a bank could eventually have to use capital to absorb losses, diminishing its cushion of equity. Many of those assets are also likely to be in non-accrual status and thus aren't earning money, resulting in lower earnings and potentially more risk of a failure in the future.

On Bankrate's asset quality test, The National Bank of Blacksburg scored 40 out of a possible 40 points, better than the national average of 37.62 points.

The percentage of problem assets a bank holds compared to its total assets is a useful indicator of asset quality.As of June 30, 2017, 0.53 percent of The National Bank of Blacksburg'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 problem assets . How large that reserve is can be a handy indicator when evaluating a bank's ability to manage problem assets, especially when compared to the total amount of at-risk loans. Unfortunately, the FDIC did not provide information on The National Bank of Blacksburg's loan loss allowance in its most recent filings.

Earnings score

How profitable a bank is affects its long-term survivability. Earnings may be retained by the bank, boosting its capital buffer, or be used to deal with problematic loans, potentially making the bank more resilient in times of trouble. Losses, on the other hand, reduce a bank's ability to do those things.

On Bankrate's test of earnings, The National Bank of Blacksburg scored 18 out of a possible 30, beating out the national average of 16.52.

Return on equity, calculated by dividing net income (essentially, profit) by the total amount of equity, is one important way to measure a bank's earnings. The most recent annualized quarterly return on equity for The National Bank of Blacksburg was 8.25 percent, below the national average of 9.28 percent.

The bank recorded net income of $7.4 million on total equity of $182.2 million for the twelve months ended June 30, 2017. The bank had an annualized return on average assets, or ROA, of 1.19 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.