Safe and Sound

Bank of Mingo

3
Star Rating
Bank of Mingo is a Williamson, WV-based, FDIC-insured bank started in 1976. As of December 31, 2017, the bank had equity of $7.3 million on $74.5 million in assets.

Thanks to the efforts of 33 full-time employees in 5 offices in WV, the bank has amassed loans and leases worth $41.6 million, including $29.1 million worth of real estate loans. The bank currently holds $67.0 million in deposits from U.S. customers.

Overall, Bankrate believes that, as of December 31, 2017, Bank of Mingo exhibited a generally satisfactory condition, earning 3 out of 5 stars for safety and soundness. Keep reading for a breakdown of how the bank fared on the three key criteria Bankrate used to evaluate U.S. banks.

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THE INSTITUTION'S SCORE

Capital Score

Capital works as a bulwark against losses and affords protection for depositors during periods of economic trouble for the bank. It follows then that a bank's level of capital is a key measurement of an institution's financial fortitude. From a safety and soundness perspective, more capital is preferred.

Bank of Mingo fell short of the national average of 13.13 on our test to measure capital adequacy, racking up 10 out of a possible 30 points.

One commonly used measure of this buffer is a bank's Tier 1 capital ratio. Bank of Mingo's Tier 1 capital ratio was 17.72 percent, exceeding the 6 percent level regulators consider adequate, but lower than the national average of 25.65 percent. The higher the capital ratio, the better the bank will be able to stand up to economic headwinds.

Overall, Bank of Mingo held equity amounting to 9.76 percent of its assets, which was lower than the national average of 12.03 percent.

Asset Quality Score

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

Having extensive holdings of these kinds of assets could eventually force a bank to use capital to cover losses, shrinking its equity cushion. It also means that there are likely to be many assets that are in non-accrual status and no longer earning money, decreasing earnings and elevating the risk of a future failure.

Bank of Mingo scored 40 out of a possible 40 points on Bankrate's test of asset quality, exceeding 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, 0.50 percent of Bank of Mingo's loans were noncurrent, meaning they were more than 90 days past due or were in non-accrual status. That's below the national average of 1.01 percent.

Banks keep a reserve to deal with troubled assets known as an "allowance for loan and lease losses." Comparing the reserve's size to the total amount of at-risk loans can be a widely used indicator when evaluating a bank's ability to manage problem assets. Unfortunately, the FDIC did not provide information on Bank of Mingo's loan loss allowance in its most recent filings.

Earnings score

A bank's ability to earn money affects its safety and soundness. A bank can retain its earnings, giving a boost to its capital buffer, or use them to address problematic loans, likely making the bank more resilient in tough times. Conversely, losses take away from a bank's ability to do those things.

Bank of Mingo fell short of the national average on Bankrate's earnings test, achieving a score of 2 out of a possible 30.

One important way to measure a bank's earnings is return on equity, or net income (essentially profit) divided by total equity. Bank of Mingo's most recent annualized quarterly return on equity was 0.35 percent, below the national average of 8.10 percent.

For the twelve months ended December 31, 2017, the bank reported net income of $18,000 on total equity of $7.3 million. The bank reported an annualized return on average assets, or ROA, of 0.02 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.