Safe and Sound

Bank of Dawson

Dawson, GA
5
Star Rating
Bank of Dawson is a Dawson, GA-based, FDIC-insured bank dating back to 1911. The bank has equity of $20.6 million on assets of $112.7 million, according to December 31, 2017, regulatory filings.

With 26 full-time employees, the bank holds loans and leases worth $71.3 million, including real estate loans of $50.0 million. U.S. bank customers currently have $91.5 million in deposits with the bank.

Overall, Bankrate believes that, as of December 31, 2017, Bank of Dawson exhibited a superior condition, earning a full 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 on safety and soundness.

WHAT IS
SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

Capital acts as a bulwark against losses and provides protection for account holders when a bank is experiencing financial instability. It follows then that a bank's level of capital is a useful measurement of an institution's financial fortitude. From a safety and soundness perspective, more capital is better.

Bank of Dawson scored above the national average of 13.13 points on our test to measure capital adequacy, achieving a score of 28 out of a possible 30 points.

A bank's Tier 1 capital ratio is an essential measure of this buffer. Bank of Dawson's Tier 1 capital ratio was 30.28 percent, above the 6 percent level regulators consider adequate, and exceeding 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 Dawson held equity amounting to 18.26 percent of its assets, which exceeded the national average of 12.03 percent.

Asset Quality Score

Bankrate uses this test to estimate the effect of problem assets, such as past-due loans, on the bank's reserves set aside to cover loan losses, as well as overall capitalization.

Having extensive holdings of these types of assets means a bank may eventually have to use capital to absorb losses, diminishing its buffer of equity. Many of those assets are also likely to be in non-accrual status and no longer earning money, decreasing earnings and increasing the risk of a future failure.

Bank of Dawson scored 36 out of a possible 40 points on Bankrate's test of asset quality, less than the national average of 37.49.

The percentage of problem assets a bank holds compared to its total assets is a helpful indicator of asset quality.As of December 31, 2017, 3.10 percent of Bank of Dawson'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 maintain a reserve known as an "allowance for loan and lease losses" to deal with troubled assets . That reserve's size can be a widely used indicator when evaluating a bank's ability to manage troubled assets, especially when compared to the total amount of at-risk loans. Unfortunately, the FDIC did not provide information on Bank of Dawson's loan loss allowance in its most recent filings.

Earnings score

A bank's profitability affects its long-term survivability. A bank can retain its earnings, giving a boost to its capital cushion, or put them to work addressing problematic loans, potentially making the bank better able to withstand financial trouble. Losses, on the other hand, reduce a bank's ability to do those things.

On Bankrate's earnings test, Bank of Dawson scored 16 out of a possible 30, beating the national average of 15.12.

One widely used measure of a bank's earnings is return on equity, or net income (essentially profit) divided by the total amount of equity. Bank of Dawson's most recent annualized quarterly return on equity was 7.23 percent, below the national average of 8.10 percent.

The bank earned net income of $1.5 million on total equity of $20.6 million for the twelve months ended December 31, 2017. The bank reported an annualized return on average assets, or ROA, of 1.32 percent, above the 1 percent deemed satisfactory in accordance with industry standards, and above 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.