Safe and Sound

Greenfield Banking Company

Greenfield, TN
3
Star Rating
Greenfield Banking Company is a Greenfield, TN-based, FDIC-insured bank started in 1935. The bank has equity of $6.2 million on assets of $55.6 million, according to December 31, 2017, regulatory filings.

Thanks to the work of 19 full-time employees in 3 offices in TN, the bank currently holds loans and leases worth $43.7 million, $26.4 million of which are for real estate. The bank currently holds $47.2 million in deposits from U.S. customers.

Overall, Bankrate believes that, as of December 31, 2017, Greenfield Banking Company exhibited a generally satisfactory condition, earning 3 out of 5 stars for safety and soundness. Here's an analysis of how the bank fared on the three major criteria Bankrate used to grade U.S. banks.

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THE INSTITUTION'S SCORE

Capital Score

Capital is a key measurement of a bank's financial resilience. It acts as a buffer against losses and provides protection for accountholders when a bank is struggling financially. From a safety and soundness perspective, more capital is preferred.

Greenfield Banking Company scored above the national average of 13.13 points on our test to measure capital adequacy, achieving a score of 14 out of a possible 30 points.

A bank's Tier 1 capital ratio is an essential measure of this buffer. Greenfield Banking Company's Tier 1 capital ratio was 13.23 percent, exceeding the 6 percent level regulators consider adequate, but below the national average of 25.65 percent. A higher capital ratio suggests the bank will be better able to weather economic difficulties.

Overall, Greenfield Banking Company held equity amounting to 11.06 percent of its assets, which was lower than the national average of 12.03 percent.

Asset Quality Score

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

Having large numbers of these types of assets suggests a bank could eventually have to use capital to absorb losses, diminishing its equity cushion. It also means that there are likely to be many assets that are in non-accrual status and no longer earning interest for the bank, pushing down earnings and elevating the chances of a future failure.

Greenfield Banking Company scored 32 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, 1.30 percent of Greenfield Banking Company'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 maintain a reserve to deal with problem assets known as an "allowance for loan and lease losses." Comparing how large that reserve is to the total amount of problem loans can be a helpful indicator when evaluating a bank's ability to manage problem assets. Unfortunately, the FDIC did not provide information on Greenfield Banking Company's loan loss allowance in its most recent filings.

Earnings score

How profitable a bank is affects its safety and soundness. A bank can retain its earnings, increasing its capital cushion, or use them to deal with problematic loans, likely making the bank better able to withstand financial shocks. Losses, on the other hand, diminish a bank's ability to do those things.

On Bankrate's earnings test, Greenfield Banking Company scored 8 out of a possible 30, coming in below the national average of 15.12.

Return on equity, calculated by dividing net income (profit, essentially) by total equity, is one important measure of a bank's earnings. The most recent annualized quarterly return on equity for Greenfield Banking Company was 3.18 percent, below the national average of 8.10 percent.

The bank reported net income of $201,000 on total equity of $6.2 million for the twelve months ended December 31, 2017. The bank reported an annualized return on average assets, or ROA, of 0.37 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.