Safe and Sound

Martinsville First Savings Bank

Martinsville, VA
2
Star Rating
Martinsville First Savings Bank is an FDIC-insured bank started in 1924 and currently based in Martinsville, VA. The bank has equity of $6.4 million on $41.6 million in assets, according to December 31, 2017, regulatory filings.

With 6 full-time employees, the bank holds loans and leases worth $22.2 million, including real estate loans of $22.2 million. U.S. bank customers currently have $35.1 million in deposits with the bank.

Overall, Bankrate believes that, as of December 31, 2017, Martinsville First Savings Bank exhibited a below-average condition, earning 2 out of 5 stars for safety and soundness. Keep reading for an analysis of how the bank fared on the three major criteria Bankrate used to grade American banks.

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THE INSTITUTION'S SCORE

Capital Score

Capital acts as a bulwark against losses and affords protection for account holders during periods of economic trouble for the bank. Therefore, a bank's level of capital is a key measurement of a bank's financial resilience. When it comes to safety and soundness, more capital is better.

Martinsville First Savings Bank scored above the national average of 13.13 points on our test to measure the adequacy of a bank's capital, receiving a score of 22 out of a possible 30 points.

A bank's Tier 1 capital ratio is a widely used measure of this buffer. Martinsville First Savings Bank's Tier 1 capital ratio was 36.16 percent, above the 6 percent level considered adequate by regulators, and above the national average of 25.65 percent. The higher the capital ratio, the better the bank will be able to stand up to economic headwinds.

Overall, Martinsville First Savings Bank held equity amounting to 15.35 percent of its assets, which exceeded the national average of 12.03 percent.

Asset Quality Score

In this test, Bankrate tries to estimate the impact of problem assets, such as unpaid loans, on the bank's loan loss reserves and overall capitalization.

A bank with extensive holdings of these kinds of assets may eventually be forced to use capital to cover losses, cutting down on its equity cushion. Many of those assets are also likely to be in non-accrual status and thus aren't earning money, reducing earnings and elevating the chances of a failure in the future.

Martinsville First Savings Bank fell below the national average of 37.49 on Bankrate's asset quality test, racking up 16 out of a possible 40 points .

A widely used indicator of asset quality is the percentage of problem assets a bank holds compared to its total assets. As of December 31, 2017, 9.70 percent of Martinsville First Savings Bank's loans were noncurrent -- in other words, 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 problem assets . How large that reserve is can be a handy indicator when evaluating a bank's ability to manage problem assets, especially when compared to the total amount of problem loans. Unfortunately, the FDIC did not provide information on Martinsville First Savings Bank's loan loss allowance in its most recent filings.

Earnings score

A bank's ability to earn money affects its safety and soundness. A bank can retain its earnings, giving a boost to its capital buffer, or put them to work addressing problematic loans, potentially making the bank more resilient in times of trouble. However, banks that are losing money are less able to do those things.

Martinsville First Savings Bank did below-average on Bankrate's earnings test, achieving a score of 6 out of a possible 30.

One important way to measure 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 Martinsville First Savings Bank was 2.86 percent, below the national average of 8.10 percent.

The bank earned net income of $181,000 on total equity of $6.4 million for the twelve months ended December 31, 2017. The bank had an annualized return on average assets, or ROA, of 0.42 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.