Safe and Sound

Bank of Ripley

Ripley, TN
4
Star Rating
Bank of Ripley is a Ripley, TN-based, FDIC-insured bank started in 1939. Regulatory filings show the bank having equity of $31.5 million on $222.3 million in assets, as of December 31, 2017.

U.S. bank customers have $188.6 million on deposit at 4 offices in TN run by 68 full-time employees. With that footprint, the bank has amassed loans and leases worth $74.2 million, including $54.0 million worth of real estate loans.

Overall, Bankrate believes that, as of December 31, 2017, Bank of Ripley exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Here's a look at how the bank did on the three key criteria Bankrate used to evaluate American banks.

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THE INSTITUTION'S SCORE

Capital Score

Capital acts as a bulwark against losses and provides protection for depositors when a bank is experiencing economic trouble. It follows then that a bank's level of capital is a crucial measurement of an institution's financial resilience. From a safety and soundness perspective, the more capital, the better.

Bank of Ripley did better than the national average of 13.13 points on our test to measure the adequacy of a bank's capital, receiving a score of 20 out of a possible 30 points.

One important measure of this buffer is a bank's Tier 1 capital ratio. Bank of Ripley's Tier 1 capital ratio was 26.40 percent, above 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 economic difficulties.

Overall, Bank of Ripley held equity amounting to 14.15 percent of its assets, which exceeded the national average of 12.03 percent.

Asset Quality Score

This test is intended to estimate how the bank's loan loss reserves and overall capitalization could be affected by troubled assets, such as unpaid loans.

Having a large number of these types of assets may eventually force a bank to use capital to absorb losses, reducing its equity cushion. Many of those assets are also likely to be 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 Ripley did better than the national average of 37.49 on Bankrate's test of asset quality, racking up 40 out of a possible 40 points .

The percentage of problem assets a bank holds compared to its total assets is a useful indicator of asset quality.As of December 31, 2017, 0.90 percent of Bank of Ripley'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 problem assets . Comparing how large that reserve is to the total amount of at-risk loans can be a handy indicator when evaluating a bank's ability to manage troubled assets. Unfortunately, the FDIC did not provide information on Bank of Ripley's loan loss allowance in its most recent filings.

Earnings score

How profitable a bank is has an effect on its long-term survivability. Earnings may be retained by the bank, expanding its capital buffer, or be used to address problematic loans, likely making the bank more resilient in times of trouble. Losses, on the other hand, reduce a bank's ability to do those things.

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

One important way to measure a bank's earnings is return on equity, or net income (essentially profit) divided by total equity. The most recent annualized quarterly return on equity for Bank of Ripley was 2.80 percent, below the national average of 8.10 percent.

For the twelve months ended December 31, 2017, the bank earned net income of $879,000 on total equity of $31.5 million. The bank reported an annualized return on average assets, or ROA, of 0.40 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.