Safe and Sound

The Bank of Southside Virginia

Carson, VA
5
Star Rating
Carson, VA-based The Bank of Southside Virginia is an FDIC-insured bank started in 1911. As of December 31, 2017, the bank held equity of $95.3 million on $555.9 million in assets.

U.S. bank customers have $453.5 million on deposit at 15 offices in VA run by 94 full-time employees. With that footprint, the bank holds loans and leases worth $221.0 million, including real estate loans of $113.4 million.

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

WHAT IS
SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

Capital works as a buffer against losses and affords protection for depositors when a bank is experiencing economic instability. Therefore, when it comes to measuring an a bank's financial stability, capital is important. When it comes to safety and soundness, the higher the capital, the better.

The Bank of Southside Virginia achieved a score of 26 out of a possible 30 points on our test to measure the adequacy of a bank's capital, exceeding the national average of 13.13.

One essential measure of this buffer is a bank's Tier 1 capital ratio. The Bank of Southside Virginia's Tier 1 capital ratio was 27.87 percent, higher than the 6 percent level considered adequate by regulators, and higher than the national average of 25.65 percent. A higher capital ratio suggests the bank will be better able to stand up to financial downturns.

Overall, The Bank of Southside Virginia held equity amounting to 17.15 percent of its assets, which exceeded the national average of 12.03 percent.

Asset Quality Score

This test's purpose is to estimate how the bank's capitalization and allocated loan loss reserves could be affected by troubled assets, such as past-due loans.

A bank with lots of these kinds of assets could eventually be forced to use capital to absorb losses, decreasing its equity cushion. It also means that there are likely to be many assets that are in non-accrual status and thus aren't earning money, reducing earnings and elevating the risk of a failure in the future.

The Bank of Southside Virginia scored 40 out of a possible 40 points on Bankrate's test of asset quality, beating out the national average of 37.49.

The percentage of problem assets a bank holds compared to its total assets is a helpful indicator of asset quality.As of December 31, 2017, 1.05 percent of The Bank of Southside Virginia's loans were noncurrent, meaning 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 keep a reserve known as an "allowance for loan and lease losses" to deal with troubled assets . That reserve's size can be a widely used indicator when evaluating a bank's ability to manage problem assets, especially when compared to the total amount of problematic loans. Unfortunately, the FDIC did not provide information on The Bank of Southside Virginia's loan loss allowance in its most recent filings.

Earnings score

A bank's earnings performance 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 financial shocks. However, banks that are losing money are less able to do those things.

The Bank of Southside Virginia scored 18 out of a possible 30 on Bankrate's earnings test, beating out the national average of 15.12.

Return on equity, calculated by dividing net income (essentially, profit) by total equity, is one important measure of a bank's earnings. The Bank of Southside Virginia's most recent annualized quarterly return on equity was 8.35 percent, above the national average of 8.10 percent.

For the twelve months ended December 31, 2017, the bank reported net income of $7.9 million on total equity of $95.3 million. The bank experienced an annualized return on average assets, or ROA, of 1.41 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.