Safe and Sound

Bank of Mount Hope, Inc.

Mount Hope, WV
5
Star Rating
Bank of Mount Hope, Inc. is an FDIC-insured bank founded in 1914 and currently based in Mount Hope, WV. Regulatory filings show the bank having equity of $15.9 million on $125.0 million in assets, as of December 31, 2017.

U.S. bank customers have $104.4 million on deposit at 3 offices in WV run by 29 full-time employees. With that footprint, the bank currently holds loans and leases worth $66.5 million, including $34.1 million worth of real estate loans.

Overall, Bankrate believes that, as of December 31, 2017, Bank of Mount Hope, Inc. exhibited a superior condition, earning a full 5 stars for safety and soundness. Here's a breakdown of how the bank fared on the three important criteria Bankrate used to evaluate U.S. banks on safety and soundness.

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THE INSTITUTION'S SCORE

Capital Score

Capital is a crucial measurement of an institution's financial strength. It acts as a buffer against losses and as protection for depositors when a bank is experiencing economic trouble. When it comes to safety and soundness, more capital is better.

Bank of Mount Hope, Inc. scored 16 out of a possible 30 points on our test to measure the adequacy of a bank's capital, better than the national average of 13.13.

One way to measure this buffer is looking at a bank's Tier 1 capital ratio. Bank of Mount Hope, Inc.'s Tier 1 capital ratio was 29.11 percent, exceeding the 6 percent level considered adequate by regulators, and exceeding the national average of 25.65 percent. The higher the capital ratio, the better the bank will be able to weather financial headwinds.

Overall, Bank of Mount Hope, Inc. held equity amounting to 12.75 percent of its assets, which exceeded the national average of 12.03 percent.

Asset Quality Score

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

Having lots of these types of assets means a bank could eventually have to use capital to absorb losses, reducing its cushion of equity. Many of those assets are also likely to be in non-accrual status and thus aren't earning interest for the bank, resulting in lower earnings and potentially more risk of a failure in the future.

On Bankrate's asset quality test, Bank of Mount Hope, Inc. scored 40 out of a possible 40 points, beating the national average of 37.49 points.

A widely used indicator of asset quality is the percentage of problem assets a bank holds compared to its total assets. As of December 31, 2017, none of Bank of Mount Hope, Inc.'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 1.01 percent.

Banks keep a reserve known as an "allowance for loan and lease losses" to deal with troubled assets . How large that reserve is can be a useful indicator when evaluating a bank's ability to manage troubled assets, especially when compared to the total amount of problem loans. Unfortunately, the FDIC did not provide information on Bank of Mount Hope, Inc.'s loan loss allowance in its most recent filings.

Earnings score

A bank's ability to earn money has an effect on its long-term survivability. A bank can retain its earnings, expanding its capital buffer, or put them to work addressing problematic loans, potentially making the bank more resilient in times of trouble. Banks that are losing money, however, are less able to do those things.

On Bankrate's test of earnings, Bank of Mount Hope, Inc. scored 16 out of a possible 30, better than the national average of 15.12.

One important way to measure a bank's earnings is return on equity, calculated by dividing net income (profit, basically) by the total amount of equity. Bank of Mount Hope, Inc.'s most recent annualized quarterly return on equity was 7.63 percent, below the national average of 8.10 percent.

For the twelve months ended December 31, 2017, the bank earned net income of $1.2 million on total equity of $15.9 million. The bank reported an annualized return on average assets, or ROA, of 0.96 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.