Safe and Sound

Mutual Savings Bank

Franklin, IN
4
Star Rating
Founded in 1890, Mutual Savings Bank is an FDIC-insured bank headquartered in Franklin, IN. The bank has equity of $15.4 million on $151.0 million in assets, according to December 31, 2017, regulatory filings.

With 41 full-time employees in 5 offices in IN, the bank holds loans and leases worth $119.3 million, including real estate loans of $110.1 million. U.S. bank customers currently have $113.5 million in deposits with the bank.

Overall, Bankrate believes that, as of December 31, 2017, Mutual Savings Bank exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Here's a look at how the bank did on the three key 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 key. It works as a buffer against losses and as protection for accountholders during periods of financial instability for the bank. From a safety and soundness perspective, the higher the capital, the better.

Mutual Savings Bank fell short of the national average of 13.13 on our test to measure capital adequacy, racking up 12 out of a possible 30 points.

One commonly used measure of this buffer is a bank's Tier 1 capital ratio. Mutual Savings Bank's Tier 1 capital ratio was 12.10 percent, higher than the 6 percent level considered adequate by regulators, but lower than the national average of 25.65 percent. The higher the capital ratio, the better the bank will be able to weather financial downturns.

Overall, Mutual Savings Bank held equity amounting to 10.18 percent of its assets, which was lower than 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 past-due mortgages.

A bank with lots of these types of assets could eventually be required to use capital to absorb losses, cutting down on its equity buffer. It also means that there are likely to be many assets that are in non-accrual status and no longer earning money, resulting in diminished earnings and potentially more risk of a failure in the future.

On Bankrate's asset quality test, Mutual Savings Bank scored 36 out of a possible 40 points, below the national average of 37.49 points.

The percentage of problem assets a bank holds compared to its total assets is a useful indicator of asset quality.As of December 31, 2017, 0.89 percent of Mutual 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 below the national average of 1.01 percent.

Banks keep a reserve to deal with troubled assets known as an "allowance for loan and lease losses." Comparing the size of that reserve to the total amount of problem loans can be a widely used indicator when evaluating a bank's ability to manage troubled assets. Unfortunately, the FDIC did not provide information on Mutual Savings Bank's loan loss allowance in its most recent filings.

Earnings score

How profitable a bank is has an effect on its long-term survivability. A bank can retain its earnings, increasing its capital cushion, or use them 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.

Mutual Savings Bank received below-average marks on Bankrate's earnings test, achieving a score of 8 out of a possible 30.

One important way to measure a bank's earnings is return on equity, or net income (profit, essentially) divided by the total amount of equity. The most recent annualized quarterly return on equity for Mutual Savings Bank was 4.00 percent, below the national average of 8.10 percent.

For the twelve months ended December 31, 2017, the bank reported net income of $607,000 on total equity of $15.4 million. 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.