Safe and Sound

PriorityOne Bank

Magee, MS
5
Star Rating
Magee, MS-based PriorityOne Bank is an FDIC-insured bank founded in 1975. The bank has equity of $69.9 million on assets of $615.2 million, according to December 31, 2017, regulatory filings.

U.S. bank customers have $499.8 million on deposit at 14 offices in MS run by 197 full-time employees. With that footprint, the bank currently holds loans and leases worth $467.6 million, including real estate loans of $396.8 million.

Overall, Bankrate believes that, as of December 31, 2017, PriorityOne Bank exhibited a superior condition, earning a full 5 stars for safety and soundness. Here's an analysis of how the bank fared on the three important criteria Bankrate used to grade American banks on safety and soundness.

WHAT IS
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THE INSTITUTION'S SCORE

Capital Score

Capital works as a cushion against losses and provides protection for account holders when a bank is struggling financially. It follows then that when it comes to measuring an a bank's financial fortitude, capital is valuable. When it comes to safety and soundness, the more capital, the better.

On our test to measure capital adequacy, PriorityOne Bank scored 14 out of a possible 30 points, beating the national average of 13.13.

One important measure of this buffer is a bank's Tier 1 capital ratio. PriorityOne Bank's Tier 1 capital ratio was 14.22 percent, higher than the 6 percent level regulators consider adequate, but below the national average of 25.65 percent. The higher the capital ratio, the better the bank will be able to weather financial headwinds.

Overall, PriorityOne Bank held equity amounting to 11.36 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 loan loss reserves and overall capitalization could be affected by problem assets, such as past-due loans.

Having lots of these types of assets could eventually force a bank to use capital to absorb losses, decreasing its buffer of equity. Many of those assets are also likely to be in non-accrual status and no longer earning money, resulting in depressed earnings and potentially more risk of a future failure.

PriorityOne Bank came in below the national average of 37.49 on Bankrate's asset quality test, racking up 36 out of a possible 40 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, 1.33 percent of PriorityOne Bank's loans were noncurrent -- in other words, they were more than 90 days past due or were in non-accrual status. That's above 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 the size of that reserve to the total amount of problematic loans can be a widely used indicator when evaluating a bank's ability to manage problem assets. Unfortunately, the FDIC did not provide information on PriorityOne Bank's loan loss allowance in its most recent filings.

Earnings score

How profitable a bank is affects its safety and soundness. Earnings can be retained by the bank, boosting its capital cushion, or be used to address problematic loans, likely making the bank better able to withstand financial shocks. Banks that are losing money, however, have less ability to do those things.

PriorityOne Bank beat the national average on Bankrate's test of earnings, achieving a score of 24 out of a possible 30.

One important way to measure a bank's earnings is return on equity, calculated by dividing net income (profit, essentially) by total equity. The most recent annualized quarterly return on equity for PriorityOne Bank was 15.99 percent, above the national average of 8.10 percent.

The bank earned net income of $10.8 million on total equity of $69.9 million for the twelve months ended December 31, 2017. The bank had an annualized return on average assets, or ROA, of 1.76 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.