Safe and Sound

Mount Vernon Bank

Mount Vernon, GA
5
Star Rating
Mount Vernon, GA-based Mount Vernon Bank is an FDIC-insured bank founded in 1901. As of December 31, 2017, the bank held equity of $13.6 million on $130.6 million in assets.

With 28 full-time employees in 3 offices in GA, the bank has amassed loans and leases worth $73.1 million, including real estate loans of $63.1 million. U.S. bank customers currently have $116.4 million in deposits with the bank.

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

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THE INSTITUTION'S SCORE

Capital Score

When it comes to measuring an a bank's financial stability, capital is crucial. It works as a cushion against losses and affords protection for depositors during periods of financial instability for the bank. When it comes to safety and soundness, the more capital, the better.

On our test to measure capital adequacy, Mount Vernon Bank received a score of 12 out of a possible 30 points, coming in below the national average of 13.13.

One essential measure of this buffer is a bank's Tier 1 capital ratio. Mount Vernon Bank's Tier 1 capital ratio was 17.33 percent, higher than the 6 percent level considered adequate by regulators, but lower than the national average of 25.65 percent. A higher capital ratio means the bank will be better able to weather economic difficulties.

Overall, Mount Vernon Bank held equity amounting to 10.41 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 reserves set aside to cover loan losses, as well as overall capitalization, could be affected by troubled assets, such as unpaid mortgages.

Having a large number of these types of assets suggests a bank may eventually have to use capital to absorb losses, reducing its cushion 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, resulting in reduced earnings and potentially more risk of a future failure.

On Bankrate's asset quality test, Mount Vernon Bank scored 40 out of a possible 40 points, above the national average of 37.49 points.

The percentage of problem assets a bank holds compared to its total assets is a handy indicator of asset quality.As of December 31, 2017, 0.92 percent of Mount Vernon Bank's loans were noncurrent, meaning 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 problem assets . How large that reserve is can be a widely used indicator when evaluating a bank's ability to manage problem assets, especially when compared to the total amount of at-risk loans. Unfortunately, the FDIC did not provide information on Mount Vernon Bank's loan loss allowance in its most recent filings.

Earnings score

How profitable a bank is affects its long-term survivability. A bank can retain its earnings, increasing its capital buffer, or put them to work addressing problematic loans, potentially making the bank more resilient in tough times. Conversely, losses reduce a bank's ability to do those things.

On Bankrate's earnings test, Mount Vernon Bank scored 22 out of a possible 30, better than the national average of 15.12.

Return on equity, calculated by dividing net income (profit, essentially) by the total amount of equity, is one important way to measure a bank's earnings. The most recent annualized quarterly return on equity for Mount Vernon Bank was 13.77 percent, above the national average of 8.10 percent.

The bank earned net income of $1.8 million on total equity of $13.6 million for the twelve months ended December 31, 2017. The bank reported an annualized return on average assets, or ROA, of 1.40 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.