Safe and Sound

Wells River Savings Bank

Wells River, VT
3
Star Rating
Wells River Savings Bank is an FDIC-insured bank started in 1892 and currently based in Wells River, VT. Regulatory filings show the bank having equity of $19.3 million on assets of $163.5 million, as of December 31, 2017.

Thanks to the work of 57 full-time employees in 6 offices in VT, the bank currently holds loans and leases worth $90.7 million, including real estate loans of $75.0 million. The bank currently holds $139.6 million in deposits from U.S. customers.

Overall, Bankrate believes that, as of December 31, 2017, Wells River Savings Bank exhibited a generally satisfactory condition, earning 3 out of 5 stars for safety and soundness. Keep reading for an analysis of how the bank did on the three important criteria Bankrate used to grade American banks.

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THE INSTITUTION'S SCORE

Capital Score

Capital is a valuable measurement of an institution's financial strength. It acts as a cushion against losses and affords protection for depositors when a bank is struggling financially. When looking at safety and soundness, more capital is better.

Wells River Savings Bank racked up 14 out of a possible 30 points on our test to measure capital adequacy, exceeding the national average of 13.13.

One widely followed measure of this buffer is a bank's Tier 1 capital ratio. Wells River Savings Bank's Tier 1 capital ratio was 18.92 percent, higher than the 6 percent level considered adequate by regulators, but below the national average of 25.65 percent. A higher capital ratio suggests the bank will be better able to weather financial downturns.

Overall, Wells River Savings Bank held equity amounting to 11.82 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 effect of problem assets, such as past-due mortgages, on the bank's capitalization and allocated loan loss reserves.

A bank with extensive holdings of these kinds of assets may eventually be required to use capital to absorb losses, decreasing its equity buffer. It also means that there are likely to be many assets that are in non-accrual status and no longer earning money, resulting in reduced earnings and potentially more risk of a future failure.

Wells River Savings Bank beat out the national average of 37.49 on Bankrate's asset quality test, racking up 40 out of a possible 40 points .

A widely used indicator of asset quality is the percentage of problem assets a bank holds compared to its total assets. As of December 31, 2017, 0.73 percent of Wells River Savings 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 maintain a reserve known as an "allowance for loan and lease losses" to deal with troubled assets . How large that reserve is can be a handy indicator when evaluating a bank's ability to manage problem assets, especially when compared to the total amount of at-risk loans. Unfortunately, the FDIC did not provide information on Wells River Savings Bank's loan loss allowance in its most recent filings.

Earnings score

A bank's profitability affects its safety and soundness. Earnings may be retained by the bank, giving a boost to its capital cushion, or be used to address problematic loans, potentially making the bank better able to withstand economic trouble. However, banks that are losing money have less ability to do those things.

Wells River Savings Bank scored 0 out of a possible 30 on Bankrate's test of earnings, coming in below the national average of 15.12.

One important measure of a bank's earnings is return on equity, calculated by dividing net income (profit, essentially) by the total amount of equity. Wells River Savings Bank's most recent annualized quarterly return on equity was -3.87 percent, below the national average of 8.10 percent.

The bank reported net income of $-778,000 on total equity of $19.3 million for the twelve months ended December 31, 2017. The bank experienced an annualized return on average assets, or ROA, of -0.47 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.