Safe and Sound

The Bank of Forest

Forest, MS
4
Star Rating
Founded in 1900, The Bank of Forest is an FDIC-insured bank headquartered in Forest, MS. The bank holds equity of $24.2 million on assets of $202.2 million, according to December 31, 2017, regulatory filings.

U.S. bank customers have $176.5 million on deposit at 4 offices in MS run by 54 full-time employees. With that footprint, the bank has amassed loans and leases worth $109.6 million, $85.5 million of which are for real estate.

Overall, Bankrate believes that, as of December 31, 2017, The Bank of Forest exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Keep reading for a look at how the bank fared on the three important criteria Bankrate used to evaluate U.S. banks.

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THE INSTITUTION'S SCORE

Capital Score

Capital is a key measurement of an institution's financial resilience. It works as a cushion against losses and affords protection for depositors during periods of economic trouble for the bank. From a safety and soundness perspective, the higher the capital, the better.

On our test to measure capital adequacy, The Bank of Forest racked up 14 out of a possible 30 points, beating the national average of 13.13.

One way to measure this buffer is looking at a bank's Tier 1 capital ratio. The Bank of Forest's Tier 1 capital ratio was 19.07 percent, higher than the 6 percent level considered adequate by regulators, but less 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 challenges.

Overall, The Bank of Forest held equity amounting to 11.96 percent of its assets, which was lower than the national average of 12.03 percent.

Asset Quality Score

In this test, Bankrate tries to determine the effect of troubled assets, such as unpaid mortgages, on the bank's loan loss reserves and overall capitalization.

Having a large number of these kinds of assets suggests a bank could have to use capital to absorb losses, reducing its equity buffer. It also means that there are likely to be many assets that are in non-accrual status and no longer earning interest for the bank, decreasing earnings and elevating the chances of a future failure.

On Bankrate's test of asset quality, The Bank of Forest scored 40 out of a possible 40 points, better than 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 The Bank of Forest'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 problem loans can be a handy indicator when evaluating a bank's ability to manage troubled assets. Unfortunately, the FDIC did not provide information on The Bank of Forest's loan loss allowance in its most recent filings.

Earnings score

A bank's profitability affects its long-term survivability. Earnings can be retained by the bank, expanding its capital cushion, or be used to deal with problematic loans, potentially making the bank better prepared to withstand economic shocks. Banks that are losing money, however, are less able to do those things.

The Bank of Forest did below-average on Bankrate's earnings test, achieving a score of 12 out of a possible 30.

One key way to measure a bank's earnings is return on equity, calculated by dividing net income (profit, basically) by total equity. The Bank of Forest's most recent annualized quarterly return on equity was 5.96 percent, below the national average of 8.10 percent.

The bank reported net income of $1.3 million on total equity of $24.2 million for the twelve months ended December 31, 2017. The bank had an annualized return on average assets, or ROA, of 0.77 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.