Safe and Sound

Grundy National Bank

Grundy, VA
4
Star Rating
Grundy National Bank is a Grundy, VA-based, FDIC-insured bank started in 1964. Regulatory filings show the bank having equity of $66.3 million on $320.3 million in assets, as of December 31, 2017.

Thanks to the work of 86 full-time employees in 8 offices in VA, the bank has amassed loans and leases worth $157.1 million, including $102.6 million worth of real estate loans. U.S. bank customers currently have $253.4 million in deposits with the bank.

Overall, Bankrate believes that, as of December 31, 2017, Grundy National Bank exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Here's an analysis of how the bank fared on the three important criteria Bankrate used to evaluate American banks.

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THE INSTITUTION'S SCORE

Capital Score

When it comes to measuring an an institution's financial strength, capital is essential. It works as a buffer against losses and provides protection for depositors when a bank is experiencing financial instability. When it comes to safety and soundness, the more capital, the better.

Grundy National Bank beat out the national average of 13.13 points on our test to measure capital adequacy, achieving a score of 30 out of a possible 30 points.

One important measure of this buffer is a bank's Tier 1 capital ratio. Grundy National Bank's Tier 1 capital ratio was 33.11 percent, above the 6 percent level considered adequate by regulators, and above the national average of 25.65 percent. A higher capital ratio suggests the bank will be better able to weather economic difficulties.

Overall, Grundy National Bank held equity amounting to 20.71 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 reserves set aside to cover loan losses, as well as overall capitalization, could be affected by problem assets, such as unpaid loans.

Having extensive holdings of these kinds of assets means a bank may have to use capital to absorb losses, diminishing its buffer of equity. It also means that there are likely to be many assets that are in non-accrual status and thus aren't earning money, reducing earnings and elevating the risk of a future failure.

On Bankrate's asset quality test, Grundy National Bank scored 28 out of a possible 40 points, below the national average of 37.49 points.

A useful indicator of asset quality is the percentage of problem assets a bank holds compared to its total assets. As of December 31, 2017, 10.28 percent of Grundy National 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 to deal with problem assets known as an "allowance for loan and lease losses." Comparing the reserve's size to the total amount of problematic loans can be a handy indicator when evaluating a bank's ability to manage problem assets. Unfortunately, the FDIC did not provide information on Grundy National Bank's loan loss allowance in its most recent filings.

Earnings score

A bank's earnings performance affects its long-term survivability. A bank can retain its earnings, expanding its capital buffer, or use them to address problematic loans, likely making the bank more resilient in tough times. Banks that are losing money, however, are less able to do those things.

Grundy National Bank fell short of the national average on Bankrate's test of earnings, achieving a score of 2 out of a possible 30.

Return on equity, calculated by dividing net income (profit, essentially) by total equity, is one important way to measure a bank's earnings. Grundy National Bank's most recent annualized quarterly return on equity was 0.02 percent, below the national average of 8.10 percent.

For the twelve months ended December 31, 2017, the bank reported net income of $16,000 on total equity of $66.3 million. The bank had an annualized return on average assets, or ROA, of 0.00 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.