Safe and Sound

Bank of Hazlehurst

1
Star Rating
Bank of Hazlehurst is a Hazlehurst, GA-based, FDIC-insured bank dating back to 1906. The bank has equity of $15.5 million on $130.5 million in assets, according to December 31, 2017, regulatory filings.

U.S. bank customers have $114.9 million on deposit at 2 offices in GA run by 28 full-time employees. With that footprint, the bank has amassed loans and leases worth $69.2 million, $29.4 million of which are for real estate.

Overall, Bankrate believes that, as of December 31, 2017, Bank of Hazlehurst exhibited a significantly below-average condition, earning 1 out of 5 stars for safety and soundness. Keep reading for a look at how the bank fared on the three important criteria Bankrate used to score American banks.

WHAT IS
SAFE AND SOUND?

Find out

THE INSTITUTION'S SCORE

Capital Score

Capital acts as a buffer against losses and provides protection for depositors during times of economic instability for the bank. It follows then that when it comes to measuring an a bank's financial strength, capital is important. 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 Hazlehurst received a score of 12 out of a possible 30 points, less than the national average of 13.13.

One widely followed measure of this buffer is a bank's Tier 1 capital ratio. Bank of Hazlehurst's Tier 1 capital ratio was 19.49 percent, higher than the 6 percent level considered adequate by regulators, but less than the national average of 25.65 percent. A higher capital ratio suggests the bank will be better able to stand up to economic downturns.

Overall, Bank of Hazlehurst held equity amounting to 11.84 percent of its assets, which was lower than the national average of 12.03 percent.

Asset Quality Score

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

A bank with large numbers of these types of assets could eventually be required to use capital to cover losses, cutting down on its equity cushion. It also means that there are likely to be many assets that are in non-accrual status and no longer earning interest for the bank, resulting in reduced earnings and potentially more risk of a failure in the future.

Bank of Hazlehurst finished below the national average of 37.49 on Bankrate's test of asset quality, racking up 4 out of a possible 40 points .

A handy indicator of asset quality is the percentage of problem assets a bank holds compared to its total assets. As of December 31, 2017, 12.80 percent of Bank of Hazlehurst'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 to deal with problem assets known as an "allowance for loan and lease losses." Comparing 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 problem assets. Unfortunately, the FDIC did not provide information on Bank of Hazlehurst's loan loss allowance in its most recent filings.

Earnings score

A bank's earnings performance has an effect on its safety and soundness. A bank can retain its earnings, boosting its capital cushion, or use them to address problematic loans, likely making the bank better prepared to withstand financial trouble. Obviously, banks that are losing money have less ability to do those things.

Bank of Hazlehurst fell behind the national average on Bankrate's test of earnings, achieving a score of 0 out of a possible 30.

Return on equity, calculated by dividing net income (essentially, profit) by total equity, is one key measure of a bank's earnings. Bank of Hazlehurst's most recent annualized quarterly return on equity was -8.96 percent, below the national average of 8.10 percent.

For the twelve months ended December 31, 2017, the bank earned net income of $-1.4 million on total equity of $15.5 million. The bank reported an annualized return on average assets, or ROA, of -1.07 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.