Safe and Sound

Menard Bank

Menard, TX
4
Star Rating
Menard, TX-based Menard Bank is an FDIC-insured bank founded in 1919. The bank has equity of $4.6 million on $35.4 million in assets, according to December 31, 2017, regulatory filings.

Thanks to the work of 10 full-time employees, the bank holds loans and leases worth $12.8 million, including $8.2 million worth of real estate loans. The bank currently holds $30.8 million in deposits from U.S. customers.

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

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THE INSTITUTION'S SCORE

Capital Score

When it comes to measuring an a bank's financial resilience, capital is key. It works as a buffer against losses and affords protection for accountholders when a bank is struggling financially. When looking at safety and soundness, more capital is better.

Menard Bank beat out the national average of 13.13 points on our test to measure capital adequacy, racking up 18 out of a possible 30 points.

One way to measure this buffer is looking at a bank's Tier 1 capital ratio. Menard Bank's Tier 1 capital ratio was 22.47 percent, exceeding the 6 percent level considered adequate by regulators, but below the national average of 25.65 percent. A higher capital ratio suggests the bank will be better able to stand up to financial difficulties.

Overall, Menard Bank held equity amounting to 13.05 percent of its assets, which exceeded the national average of 12.03 percent.

Asset Quality Score

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

Having a large number of these kinds of assets could eventually require a bank to use capital to cover losses, decreasing its cushion of equity. Many of those assets are also likely to be in non-accrual status and thus aren't earning money, diminishing earnings and increasing the risk of a future failure.

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

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, 0.21 percent of Menard 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 known as an "allowance for loan and lease losses" to deal with troubled assets . Comparing how large that reserve is to the total amount of problematic loans can be a useful indicator when evaluating a bank's ability to manage troubled assets. Unfortunately, the FDIC did not provide information on Menard Bank's loan loss allowance in its most recent filings.

Earnings score

A bank's profitability has an effect on its safety and soundness. Earnings can be retained by the bank, increasing its capital buffer, or be used to deal with problematic loans, likely making the bank better able to withstand financial shocks. Banks that are losing money, however, are less able to do those things.

Menard Bank fell short of the national average on Bankrate's test of earnings, achieving a score of 10 out of a possible 30.

Return on equity, calculated by dividing net income (essentially, profit) by total equity, is one widely used measure of a bank's earnings. The most recent annualized quarterly return on equity for Menard Bank was 4.18 percent, below the national average of 8.10 percent.

For the twelve months ended December 31, 2017, the bank recorded net income of $193,000 on total equity of $4.6 million. The bank reported an annualized return on average assets, or ROA, of 0.55 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.