Safe and Sound

Community Bank, North Mississippi

Amory, MS
4
Star Rating
Community Bank, North Mississippi is an FDIC-insured bank started in 1912 and currently headquartered in Amory, MS. As of December 31, 2017, the bank held equity of $51.3 million on assets of $578.6 million.

U.S. bank customers have $475.9 million on deposit at 8 offices in multiple states run by 104 full-time employees. With that footprint, the bank holds loans and leases worth $362.7 million, including real estate loans of $324.3 million.

Overall, Bankrate believes that, as of December 31, 2017, Community Bank, North Mississippi exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Keep reading for a look at how the bank did on the three key criteria Bankrate used to score American banks.

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SAFE AND SOUND?

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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 financial instability for the bank. Therefore, a bank's level of capital is a crucial measurement of a bank's financial resilience. From a safety and soundness perspective, more capital is better.

Community Bank, North Mississippi fell below the national average of 13.13 on our test to measure capital adequacy, scoring 8 out of a possible 30 points.

One widely followed measure of this buffer is a bank's Tier 1 capital ratio. Community Bank, North Mississippi's Tier 1 capital ratio was 14.69 percent, higher than the 6 percent level regulators consider adequate, but under the national average of 25.65 percent. The higher the capital ratio, the better the bank will be able to stand up to financial downturns.

Overall, Community Bank, North Mississippi held equity amounting to 8.86 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 troubled assets, such as past-due loans, on the bank's reserves set aside to cover loan losses, as well as overall capitalization.

A bank with extensive holdings of these types of assets could eventually be forced to use capital to cover losses, reducing its equity buffer. It also means that there are likely to be many assets that are in non-accrual status and thus aren't earning money, diminishing earnings and elevating the chances of a failure in the future.

On Bankrate's asset quality test, Community Bank, North Mississippi scored 36 out of a possible 40 points, less than the national average of 37.49 points.

A helpful indicator of asset quality is the percentage of problem assets a bank holds compared to its total assets. As of December 31, 2017, 0.33 percent of Community Bank, North Mississippi'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 maintain a reserve to deal with problem assets known as an "allowance for loan and lease losses." That reserve's size can be a widely used indicator when evaluating a bank's ability to manage troubled assets, especially when compared to the total amount of problematic loans. Unfortunately, the FDIC did not provide information on Community Bank, North Mississippi's loan loss allowance in its most recent filings.

Earnings score

A bank's profitability has an effect on its long-term survivability. A bank can retain its earnings, boosting its capital cushion, or use them to address problematic loans, likely making the bank better prepared to withstand financial trouble. Banks that are losing money, however, are less able to do those things.

Community Bank, North Mississippi did below-average on Bankrate's test of earnings, achieving a score of 12 out of a possible 30.

Return on equity, calculated by dividing net income (profit, basically) by the total amount of equity, is one important measure of a bank's earnings. Community Bank, North Mississippi's most recent annualized quarterly return on equity was 5.57 percent, below the national average of 8.10 percent.

The bank earned net income of $2.9 million on total equity of $51.3 million for the twelve months ended December 31, 2017. The bank had an annualized return on average assets, or ROA, of 0.53 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.