Safe and Sound

Bank of Benoit

Benoit, MS
4
Star Rating
Founded in 1904, Bank of Benoit is an FDIC-insured bank based in Benoit, MS. Regulatory filings show the bank having equity of $1.9 million on $15.8 million in assets, as of December 31, 2017.

With 5 full-time employees, the bank currently holds loans and leases worth $4.1 million, including real estate loans of $882,000. U.S. bank customers currently have $13.9 million in deposits with the bank.

Overall, Bankrate believes that, as of December 31, 2017, Bank of Benoit exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Keep reading for a look at how the bank did on the three key criteria Bankrate used to score U.S. banks.

WHAT IS
SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

Capital works as a cushion against losses and affords protection for depositors when a bank is struggling financially. Therefore, when it comes to measuring an a bank's financial stability, capital is crucial. From a safety and soundness perspective, more capital is preferred.

Bank of Benoit achieved a score of 16 out of a possible 30 points on our test to measure capital adequacy, exceeding the national average of 13.13.

One widely used measure of this buffer is a bank's Tier 1 capital ratio. Bank of Benoit's Tier 1 capital ratio was 24.73 percent, above the 6 percent level regulators consider adequate, but below the national average of 25.65 percent. The higher the capital ratio, the better the bank will be able to weather economic difficulties.

Overall, Bank of Benoit held equity amounting to 12.17 percent of its assets, which exceeded the national average of 12.03 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 loans.

Having a large number of these kinds of assets could eventually force a bank to use capital to absorb losses, decreasing its cushion 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, reducing earnings and elevating the risk of a failure in the future.

Bank of Benoit scored 36 out of a possible 40 points on Bankrate's test of asset quality, coming in below the national average of 37.49.

A useful indicator of asset quality is the percentage of problem assets a bank holds compared to its total assets. As of December 31, 2017, 6.17 percent of Bank of Benoit's loans were noncurrent, meaning they were more than 90 days past due or were in non-accrual status. That's above the national average of 1.01 percent.

Banks keep a reserve to deal with problem assets known as an "allowance for loan and lease losses." Comparing how large that reserve is to the total amount of problem 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 safety and soundness. A bank can retain its earnings, giving a boost to its capital buffer, or use them to address problematic loans, potentially making the bank better able to withstand financial shocks. Banks that are losing money, however, are less able to do those things.

Bank of Benoit scored 6 out of a possible 30 on Bankrate's earnings test, below the national average of 15.12.

Return on equity, calculated by dividing net income (profit, essentially) by total equity, is one important way to measure a bank's earnings. The most recent annualized quarterly return on equity for Bank of Benoit was 2.73 percent, below the national average of 8.10 percent.

The bank reported net income of $53,000 on total equity of $1.9 million for the twelve months ended December 31, 2017. The bank experienced an annualized return on average assets, or ROA, of 0.32 percent, below the 1 percent deemed satisfactory in accordance with industry standards and below 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.