Safe and Sound

MutualOne Bank

Framingham, MA
5
Star Rating
MutualOne Bank is an FDIC-insured bank started in 1889 and currently based in Framingham, MA. The bank has equity of $142.3 million on $806.2 million in assets, according to December 31, 2017, regulatory filings.

With 86 full-time employees in 3 offices in MA, the bank has amassed loans and leases worth $677.0 million, including real estate loans of $521.2 million. U.S. bank customers currently have $602.2 million in deposits with the bank.

Overall, Bankrate believes that, as of December 31, 2017, MutualOne Bank exhibited a superior condition, earning a full 5 stars for safety and soundness. Here's a breakdown of how the bank did on the three key criteria Bankrate used to score U.S. banks on safety and soundness.

WHAT IS
SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

Capital acts as a cushion against losses and as protection for depositors when a bank is struggling financially. Therefore, when it comes to measuring an a bank's financial strength, capital is valuable. When looking at safety and soundness, the higher the capital, the better.

On our test to measure capital adequacy, MutualOne Bank racked up 26 out of a possible 30 points, beating out the national average of 13.13.

A bank's Tier 1 capital ratio is an important measure of this buffer. MutualOne Bank's Tier 1 capital ratio was 18.84 percent, higher than the 6 percent level regulators consider adequate, but lower than the national average of 25.65 percent. The higher the capital ratio, the better the bank will be able to stand up to financial downturns.

Overall, MutualOne Bank held equity amounting to 17.65 percent of its assets, which exceeded the national average of 12.03 percent.

Asset Quality Score

This test is intended to estimate how the bank's loan loss reserves and overall capitalization could be affected by troubled assets, such as unpaid loans.

A bank with large numbers of these types of assets could 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 no longer earning interest for the bank, decreasing earnings and elevating the chances of a failure in the future.

MutualOne Bank did better than the national average of 37.49 on Bankrate's test of asset quality, racking up 40 out of a possible 40 points .

The percentage of problem assets a bank holds compared to its total assets is a widely used indicator of asset quality.As of December 31, 2017, 0.75 percent of MutualOne 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 reserve's size to the total amount of problem loans can be a helpful indicator when evaluating a bank's ability to manage problem assets. Unfortunately, the FDIC did not provide information on MutualOne Bank's loan loss allowance in its most recent filings.

Earnings score

A bank's ability to earn money has an effect on its safety and soundness. Earnings may be retained by the bank, increasing its capital cushion, or be used to deal with problematic loans, likely making the bank better prepared to withstand economic shocks. Conversely, losses diminish a bank's ability to do those things.

On Bankrate's test of earnings, MutualOne Bank scored 16 out of a possible 30, better than the national average of 15.12.

Return on equity, calculated by dividing net income (essentially, profit) by total equity, is one important way to measure a bank's earnings. MutualOne Bank's most recent annualized quarterly return on equity was 7.68 percent, below the national average of 8.10 percent.

For the twelve months ended December 31, 2017, the bank earned net income of $10.5 million on total equity of $142.3 million. The bank reported an annualized return on average assets, or ROA, of 1.37 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.