Safe and Sound

Virginia Bank and Trust Company

Danville, VA
4
Star Rating
Virginia Bank and Trust Company is an FDIC-insured bank founded in 1945 and currently headquartered in Danville, VA. The bank holds equity of $22.7 million on assets of $195.1 million, according to December 31, 2017, regulatory filings.

Thanks to the efforts of 70 full-time employees in 8 offices in VA, the bank holds loans and leases worth $133.8 million, including real estate loans of $91.2 million. U.S. bank customers currently have $170.1 million in deposits with the bank.

Overall, Bankrate believes that, as of December 31, 2017, Virginia Bank and Trust Company exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Keep reading for an analysis of how the bank fared on the three key criteria Bankrate used to grade U.S. banks.

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THE INSTITUTION'S SCORE

Capital Score

Capital acts as a bulwark against losses and as protection for account holders during times of financial trouble for the bank. It follows then that a bank's level of capital is a useful measurement of a bank's financial fortitude. When it comes to safety and soundness, the higher the capital, the better.

On our test to measure capital adequacy, Virginia Bank and Trust Company achieved a score of 14 out of a possible 30 points, exceeding the national average of 13.13.

A bank's Tier 1 capital ratio is an essential measure of this buffer. Virginia Bank and Trust Company's Tier 1 capital ratio was 19.27 percent, exceeding the 6 percent level regulators consider adequate, but less than the national average of 25.65 percent. A higher capital ratio means the bank will be better able to stand up to financial downturns.

Overall, Virginia Bank and Trust Company held equity amounting to 11.64 percent of its assets, which was lower than the national average of 12.03 percent.

Asset Quality Score

Bankrate uses this test to determine the impact of troubled assets, such as unpaid mortgages, on the bank's capitalization and allocated loan loss reserves.

A bank with lots of these kinds of assets may eventually be forced to use capital to cover losses, diminishing its buffer of equity. Many of those assets are also likely to be in non-accrual status and no longer earning interest for the bank, decreasing earnings and increasing the chances of a future failure.

Virginia Bank and Trust Company scored 36 out of a possible 40 points on Bankrate's test of asset quality, falling short of the national average of 37.49.

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, 0.98 percent of Virginia Bank and Trust Company'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 problem assets known as an "allowance for loan and lease losses." Comparing how large that reserve is to the total amount of problematic loans can be a useful indicator when evaluating a bank's ability to manage troubled assets. Unfortunately, the FDIC did not provide information on Virginia Bank and Trust Company'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. A bank can retain its earnings, increasing its capital buffer, or put them to work addressing problematic loans, potentially making the bank more resilient in times of trouble. Losses, on the other hand, reduce a bank's ability to do those things.

On Bankrate's earnings test, Virginia Bank and Trust Company scored 8 out of a possible 30, falling short of the national average of 15.12.

One important measure of a bank's earnings is return on equity, or net income (essentially profit) divided by total equity. The most recent annualized quarterly return on equity for Virginia Bank and Trust Company was 3.68 percent, below the national average of 8.10 percent.

The bank reported net income of $858,000 on total equity of $22.7 million for the twelve months ended December 31, 2017. The bank reported an annualized return on average assets, or ROA, of 0.44 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.