Safe and Sound

Belt Valley Bank

Belt, MT
5
Star Rating
Started in 1936, Belt Valley Bank is an FDIC-insured bank headquartered in Belt, MT. As of December 31, 2017, the bank had equity of $8.8 million on $59.3 million in assets.

With 15 full-time employees, the bank has amassed loans and leases worth $48.1 million, including real estate loans of $35.5 million. U.S. bank customers currently have $49.9 million in deposits with the bank.

Overall, Bankrate believes that, as of December 31, 2017, Belt Valley Bank exhibited a superior condition, earning a full 5 stars for safety and soundness. Here's a look at how the bank did on the three important criteria Bankrate used to score American banks on safety and soundness.

WHAT IS
SAFE AND SOUND?

Find out

THE INSTITUTION'S SCORE

Capital Score

Capital acts as a cushion against losses and as protection for depositors when a bank is struggling financially. It follows then that a bank's level of capital is a key measurement of a bank's financial strength. When it comes to safety and soundness, more capital is preferred.

On our test to measure the adequacy of a bank's capital, Belt Valley Bank scored 20 out of a possible 30 points, above the national average of 13.13.

One commonly used measure of this buffer is a bank's Tier 1 capital ratio. Belt Valley Bank's Tier 1 capital ratio was 19.11 percent, above the 6 percent level considered adequate by regulators, but less than the national average of 25.65 percent. The higher the capital ratio, the better the bank will be able to weather financial challenges.

Overall, Belt Valley Bank held equity amounting to 14.81 percent of its assets, which exceeded the national average of 12.03 percent.

Asset Quality Score

This test is intended to try to understand how the bank's loan loss reserves and overall capitalization could be affected by problem assets, such as unpaid mortgages.

A bank with a large number of these types of assets could eventually be forced to use capital to absorb 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 thus aren't earning money, decreasing earnings and increasing the risk of a failure in the future.

Belt Valley Bank scored 36 out of a possible 40 points on Bankrate's asset quality test, coming in below the national average of 37.49.

The percentage of problem assets a bank holds compared to its total assets is a widely used indicator of asset quality.As of December 31, 2017, 1.89 percent of Belt Valley Bank'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 keep a reserve known as an "allowance for loan and lease losses" to deal with troubled assets . The size of that reserve can be a helpful indicator when evaluating a bank's ability to manage problem assets, especially when compared to the total amount of at-risk loans. Unfortunately, the FDIC did not provide information on Belt Valley Bank'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, expanding its capital buffer, or put them to work addressing problematic loans, likely making the bank better able to withstand financial shocks. Losses, on the other hand, take away from a bank's ability to do those things.

Belt Valley Bank outperformed the average on Bankrate's test of earnings, achieving a score of 16 out of a possible 30.

Return on equity, calculated by dividing net income (profit, essentially) by the total amount of equity, is one key measure of a bank's earnings. Belt Valley Bank's most recent annualized quarterly return on equity was 8.00 percent, below the national average of 8.10 percent.

The bank earned net income of $682,000 on total equity of $8.8 million for the twelve months ended December 31, 2017. The bank had an annualized return on average assets, or ROA, of 1.16 percent, above the 1 percent deemed satisfactory in accordance with industry standards, and above 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.