Safe and Sound

Bank of Walnut Grove

Walnut Grove, MS
4
Star Rating
Bank of Walnut Grove is an FDIC-insured bank started in 1923 and currently headquartered in Walnut Grove, MS. As of June 30, 2017, the bank held equity of $8.7 million on assets of $58.5 million.

Thanks to the work of 12 full-time employees, the bank holds loans and leases worth $24.5 million, including real estate loans of $17.1 million. U.S. bank customers currently have $49.6 million in deposits with the bank.

Overall, Bankrate believes that, as of June 30, 2017, Bank of Walnut Grove exhibited a superior condition, earning a full 5 stars for safety and soundness. Keep reading for a look at how the bank faired on the three major criteria Bankrate used to evaluate U.S. banks on safety and soundness.

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THE INSTITUTION'S SCORE

Capital Score

When it comes to measuring an an institution's financial strength, capital is crucial. It works as a bulwark against losses and as protection for accountholders when a bank is experiencing financial trouble. When looking at safety and soundness, the higher the capital, the better.
Bank of Walnut Grove beat out the national average of 13.38 points on our test to measure capital adequacy, racking up 20 out of a possible 30 points.

One way to measure this buffer is looking at a bank's Tier 1 capital ratio. Bank of Walnut Grove's Tier 1 capital ratio was 31.99 percent, exceeding the 6 percent level regulators consider adequate, and above the national average of 25.16 percent. The higher the capital ratio, the better the bank will be able to weather financial headwinds.

Overall, Bank of Walnut Grove held equity amounting to 14.79 percent of its assets, which exceeded the national average of 12.10 percent.

Asset Quality Score

In this test, Bankrate tries to determine the effect of problem assets, such as past-due mortgages, on the bank's loan loss reserves and overall capitalization.

Having large numbers of these kinds of assets could eventually force a bank to use capital to cover losses, diminishing its cushion of equity. Many of those assets are also likely to be in non-accrual status and no longer earning interest for the bank, reducing earnings and increasing the risk of a failure in the future.

On Bankrate's test of asset quality, Bank of Walnut Grove scored 40 out of a possible 40 points, better than the national average of 37.62 points.

A handy indicator of asset quality is the percentage of problem assets a bank holds compared to its total assets. As of June 30, 2017, none of Bank of Walnut Grove'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 1.04 percent.

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

Earnings score

How profitable a bank is affects its long-term survivability. A bank can retain its earnings, giving a boost to its capital cushion, or use them to address problematic loans, likely making the bank more resilient in tough times. Obviously, banks that are losing money are less able to do those things.

Bank of Walnut Grove scored 12 out of a possible 30 on Bankrate's test of earnings, falling short of the national average of 16.52.

One widely used measure of a bank's earnings is return on equity, calculated by dividing net income (profit, essentially) by total equity. The most recent annualized quarterly return on equity for Bank of Walnut Grove was 5.82 percent, below the national average of 9.28 percent.

The bank recorded net income of $248,000 on total equity of $8.7 million for the twelve months ended June 30, 2017. The bank experienced an annualized return on average assets, or ROA, of 0.84 percent, below the 1 percent deemed satisfactory in accordance with industry standards and below the average for U.S. banks of 1.14 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.