Safe and Sound

Mason Bank

Mason, TX
5
Star Rating
Mason Bank is a Mason, TX-based, FDIC-insured bank started in 1904. The bank has equity of $18.8 million on assets of $122.1 million, according to December 31, 2017, regulatory filings.

Thanks to the work of 17 full-time employees, the bank has amassed loans and leases worth $42.2 million, including real estate loans of $20.5 million. U.S. bank customers currently have $101.3 million in deposits with the bank.

Overall, Bankrate believes that, as of December 31, 2017, Mason Bank exhibited a superior condition, earning a full 5 stars for safety and soundness. Keep reading for an analysis of how the bank fared on the three major criteria Bankrate used to evaluate U.S. banks on safety and soundness.

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THE INSTITUTION'S SCORE

Capital Score

Capital is a crucial measurement of a bank's financial resilience. It acts as a bulwark against losses and as protection for accountholders during periods of financial trouble for the bank. From a safety and soundness perspective, the more capital, the better.

Mason Bank beat out the national average of 13.13 points on our test to measure capital adequacy, receiving a score of 22 out of a possible 30 points.

One way to measure this buffer is looking at a bank's Tier 1 capital ratio. Mason Bank's Tier 1 capital ratio was 36.92 percent, higher than the 6 percent level regulators consider adequate, and higher than the national average of 25.65 percent. A higher capital ratio suggests the bank will be better able to weather financial challenges.

Overall, Mason Bank held equity amounting to 15.38 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 past-due loans, on the bank's loan loss reserves and overall capitalization.

Having a large number of these kinds of assets could eventually require a bank to use capital to cover losses, reducing 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 interest for the bank, pushing down earnings and elevating the chances of a failure in the future.

Mason Bank scored 40 out of a possible 40 points on Bankrate's asset quality test, better than the national average of 37.49.

A handy indicator of asset quality is the percentage of problem assets a bank holds compared to its total assets. As of December 31, 2017, none of Mason Bank'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 handle problem assets known as an "allowance for loan and lease losses." How large that reserve is can be a useful indicator when evaluating a bank's ability to manage troubled assets, especially when compared to the total amount of at-risk loans. Unfortunately, the FDIC did not provide information on Mason 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, giving a boost to its capital buffer, or use them to deal with problematic loans, likely making the bank more resilient in times of trouble. Conversely, losses diminish a bank's ability to do those things.

On Bankrate's test of earnings, Mason Bank scored 18 out of a possible 30, better than the national average of 15.12.

One important way to measure a bank's earnings is return on equity, or net income (essentially profit) divided by the total amount of equity. The most recent annualized quarterly return on equity for Mason Bank was 9.29 percent, above the national average of 8.10 percent.

The bank reported net income of $1.7 million on total equity of $18.8 million for the twelve months ended December 31, 2017. The bank reported an annualized return on average assets, or ROA, of 1.47 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.