PUBLIC DISCLOSURESeptember 11, 2017COMMUNITY REINVESTMENT ACTPERFORMANCE EVALUATIONVidalia Federal Savings BankCharter Number 704067300 Jackson StVidalia, GA 30474-4708Office of the Comptroller of the CurrencyThree Ravinia Drive Suite550Atlanta, GA 30346NOTE:This document is an evaluation of this institution’s record of meeting the creditneeds of its entire community, including low- and moderate-incomeneighborhoods consistent with safe and sound operation of the institution.This evaluation is not, nor should it be construed as, an assessment of thefinancial condition of this institution. The rating assigned to this institution doesnot represent an analysis, conclusion, or opinion of the federal financialsupervisory agency concerning the safety and soundness of this financialinstitution.


Charter Number: 704067INSTITUTION'S CRA RATING: This institution is rated SatisfactoryVidalia Federal Savings Bank’s CRA performance rating is supported by the following: The loan-to-deposit (LTD) ratio is less than reasonable in light of the institution’ssize, business strategies, and loan demand. The bank’s record of lending within the assessment area meets the standards forsatisfactory performance. Lending to Borrowers of Different Income Levels is reasonable and meets thestandards for satisfactory performance. The distribution of loans among census tracts of different income levels isreasonable and meets the standards for satisfactory performance.SCOPE OF EXAMINATIONThis Performance Evaluation (PE) is an assessment of Vidalia Federal’s ability to meetthe credit needs of the communities in which it operates. We determined the bank’sprimary lending products to be residential mortgage loans and consumer loans basedon number and dollar volume. To evaluate the bank’s lending performance, we reviewedhome mortgage and consumer loans originated between January 1, 2015 andDecember 31, 2016. A specific data integrity review was not needed for this evaluation,as this bank is not subject to the Home Mortgage Disclosure Act. Loan performancewas determined using 2015 and 2016 internal loan registers and sampling.A full-scope review was conducted of the institution’s assessment area, which is definedas Toombs and Montgomery Counties. As a traditional thrift, Vidalia Federal’s primaryfocus is the origination of home mortgage loans. We do recognize, however, that theconsumer loans originated by Vidalia Federal also satisfy important credit needs in ruralareas. In performing this evaluation, we placed equal weight on the bank’s 1-4 familyresidential lending and its consumer lending.DESCRIPTION OF INSTITUTIONVidalia Federal is a federally chartered thrift headquartered in Vidalia, Georgia. As ofJune 30, 2017, Vidalia Federal had total assets of 230.6 million. Deposits are stable3

Charter Number: 704067and typically generated within the communities the bank serves. Vidalia Federalconducts business from its main office in Vidalia, Georgia, in Toombs County.In addition, the bank operates a branch office in the city of Lyons, which is also locatedin Toombs County. Both offices offer drive-thru facilities and ATMs, and are located inmiddle-income census tracts. There were no legal or regulatory impediments adverselyaffecting Vidalia Federal’s ability to meet community credit needs during the reviewperiod.As a traditional savings association, Vidalia Federal has concentrated its operations inthe origination of mortgage and consumer loans and the acceptance of deposits. Theinstitution offers fixed-rate mortgage loans with loan-to-value ratios up to 80 percent forthe purchase and refinancing of residential dwellings. Much of the bank’s consumerlending consists of unsecured loans made to existing customers to cover essentialhousehold expenses such as car and appliance repairs. The institution also offersconsumer loans for boats and other watercraft, heavy equipment, and recreationalvehicles. As of June 30, 2017, 88.7 percent of the bank’s loan mix consisted of 1-4family secured real estate. However, the bank originated a substantial volume ofconsumer loans during the evaluation period totaling 696 with a total dollar amount ofapproximately 6 million. The bank does not offer any special lending-related programsthat would promote affordable housing in the assessment area.Vidalia Federal delivers lending and deposit products to the public primarily through themain office in Vidalia and branch office in Lyons. The institution also offers telephoneand online banking. By telephone, customers can make payments on loans with VidaliaFederal, check deposit and loan balances, transfer funds between accounts, and placestop payment orders. Online, customers may obtain copies of checks, make paymentson Vidalia Federal loans, and make utility payments and payments to any of theircreditors. Hours for both locations are from 9:00 a.m. until 3:00 p.m. Monday throughThursday, and from 9:00 a.m. until 5:00 p.m. on Friday. The institution does not offerSaturday banking hours.The last CRA Examination was conducted as of June 25, 2012, and resulted in a ratingof Satisfactory.DESCRIPTION OF ASSESSMENT AREAVidalia Federal has designated Montgomery and Toombs Counties, Georgia, as itsassessment area. The assessment area meets the requirements of the CRA regulationand does not arbitrarily exclude low-or moderate-income census tracts. Montgomeryand Toombs Counties are not located in any Metropolitan Statistical Area. According to2010 Census data, the assessment area includes no low-income, two moderateincome,five middle-income, and two upper-income census tracts. All five of the middleincomecensus tracts are designated as distressed or underserved.4

Charter Number: 704067According to the 2010 US Census data, the population of the assessment area is36,346 persons with 9,141 families. Approximately 25.15 percent of the families in theassessment area are low-income, 16.17 percent moderate- income, 16.79 percentmiddle-income, and 41.89 percent upper-income. Approximately 22.63 percent ofhouseholds earn less than the poverty level.Montgomery and Toombs Counties are contiguous to one another and located insoutheast Georgia. Montgomery and Toombs are largely rural. Vidalia is the largestcity in Toombs County, and Lyons is the county seat. Both of the bank’s branchlocations are in Toombs County. One is in Vidalia and the other is in Lyons. Thecounty seat of Montgomery is Mt. Vernon. Other incorporated areas in MontgomeryCounty include Ailey, Uvalda, and Tarrytown. According to the U.S. Bureau of LaborStatistics, as of August 2017, the unemployment rates in Montgomery and ToombsCounties were 8.1 percent, and 8.5 percent, respectively. The Georgia statewideunemployment rate for August 2017 was lower, at 4.7 percent. Montgomery andToombs Counties are home to several large employers such as Trane, a provider ofhome and commercial heating and air systems, and TUMI, makers of upscale luggageand other accessories. Other major employers in the area include Meadows RegionalMedical Center, Plant Hatch (a nuclear energy facility), and Chicken of the Sea’scanning operations. In addition, the city of Vidalia is renowned for its onion crop,nationally recognized as “Vidalia Onions”.Vidalia Federal competes with local financial institutions and mortgage loan providers,as well as with nationwide mortgage lenders operating in the bank’s assessment area.Besides Vidalia Federal, six other FDIC-insured financial institutions operate twelvebranch locations throughout Toombs and Montgomery Counties. As of June 30, 2017,the top three banks based on total deposits in the assessment area were Ameris Bank( 218 million), Vidalia Federal ( 199 million), and Altamaha Bank and Trust ( 116million). Owner-occupied housing units make up 54.13 percent of total assessmentarea housing units. Total rental units are 33.74 percent of total housing units. Thepercentage of units that are owner-occupied is among the lowest for counties statewide,and the rental unit percentage is among the highest. In addition, the median age ofassessment area housing is 1979. A check of the Georgia Multiple Listing service inOctober 2017, showed no listings for newly constructed homes in the assessment area.The shortage of owner-occupied homes and the lack of new construction in the area,make it difficult to originate residential mortgage loans. In addition, nationwide internetlenders are positioned to offer low rates and pricing in the assessment area, strainingthe bank’s ability to compete.The following table reflects selected demographics for the institution’s assessment area:5

Charter Number: 704067Demographic Information for Assessment AreaDemographic Characteristics#Low% of #Moderate% of #Middle% of #Upper% of #Geographies (Census Tracts/BNAs)90.00%22.22%55.56%22.22%NA*% of#0Population by ied Housing s by .00%30.18%57.37%12.45%0Farms by GeographyFamily Distribution by Income LevelDistribution of Low- andModerateIncome Familiesthroughout AAGeographies,Median Family IncomeHUD Adjusted Median Family 47,800Income for 2015HUD Adjusted Median FamilyIncome for 2016 45,300Median Housing Value 83,968Unemployment Rate (Toombs) 8.5%Unemployment Rate (Montgomery) 8.1%(*) The NA category consists of geographies that have not been assigned an income classification.Source: 2010 U.S. Census, and HUD updated MFI.CONCLUSIONS WITH RESPECT TO PERFORMANCE CRITERIAVidalia Federal’s Lending in its Assessment Area meets the standards for satisfactoryperformance. Lending to Borrowers of Different Incomes and Geographic Distributionalso meet the standards for satisfactory performance. The average LTD ratio is low andneeds improvement.Loan-to-Deposit RatioVidalia Federal’s LTD ratio is less than reasonable. The average LTD ratiodemonstrates that lending levels are low and not commensurate with the volume ofcommunity deposits. The average LTD ratio was calculated by averaging the bank’sratios over 22 business quarters starting with the quarter ending March 31, 2012through the quarter ending June 30, 2017. During this period, the bank’s LTD ratio6

Charter Number: 704067averaged 35.18 percent. The quarterly low over the 22 business quarters was 30.67percent (quarter ended March 31, 2017). The quarterly high was 43.22 percent (quarterended March 31, 2012). These percentages clearly depict a steadily declining trend inlending volume over the period reviewed.There are two similarly-sized community banks also operating in Vidalia Federal’sassessment area. Over the same 22 quarter review period, these banks had averageLTD ratios of 77.05 percent and 53.94 percent. However, both banks are commerciallenders while Vidalia Federal does not engage in commercial lending.We considered that even with a 35.18 percent LTD ratio, Vidalia Federal ranks thirdwhen compared to 2015 lending market share in the assessment area amongHMDAreporting lenders (Vidalia Federal is not a HMDA lender). The top two lenders inthe assessment area are both larger, regional banks. As noted previously, our reviewalso disclosed a shortage of new housing construction and owner-occupied housing inthe area, which limits lending opportunities and results in intense competition over alimited market. In light of these factors, we determined that Vidalia Federal’s averageLTD ratio is not so extremely low that it would preclude an overall CRA performancerating of Satisfactory. Still, the bank’s LTD ratio is less than reasonable and needs toimprove.Lending in Assessment AreaThe bank’s record of lending inside its assessment area meets the standards forsatisfactory performance. For the period reviewed, 87.64 percent by number, and 77.50percent by dollar volume of home mortgages and consumer loans were originated withinthe assessment area. The table below depicts the number and dollar volume of homemortgages and consumer loans originated inside and outside the assessment area fromJanuary 1, 2015, through December 31, 2016.Lending in Montgomery and Toombs Counties Assessment AreaNumber of LoansInsideDollars of LoansOutsideInsideOutsideTotalLoan Type%#%HomeMortgages 10979.562820.44ConsumerLoans 62189.227510.78Totals#730 87.64% 103 12.36%Total % %13713,820,30074.464,739,70025.54 18,560,0006965,252,74986.83796,97513.17 6,049,724833 19,073,049 77.50% 5,536,675 22.50%7 24,609,724

Charter Number: 704067Source: Loan sample; internal bank dataLending to Borrowers of Different IncomesOverall, the distribution of loans among borrowers of different income levels isreasonable in light of demographic comparators and comparison with aggregate lendingdata, and meets the standards for satisfactory performance.Home MortgagesOverall, the bank’s home mortgage lending to low- and moderate-income borrowers isreasonable in comparison to demographics (taking poverty levels into account) and tothe aggregate of all lenders, and meets the standards for satisfactory performance. Forpurposes of this analysis, family income levels were stratified as a percentage of theupdated median family income (MFI) levels for the non-metropolitan areas of the stateof Georgia. The updated MFI figures were 47,800 for 2015 and 45,300 for 2016.Vidalia Federal’s percentage of lending to low-income borrowers is low in relation to thedemographics for the assessment area. However, the percentage of households livingbelow the poverty level in Montgomery and Toombs Counties combined is 22.01percent. Considering that such a high poverty level limits lending opportunities tolowincome borrowers, the bank’s volume of lending to low-income borrowers isreasonable. The level of loan originations to moderate-income borrowers is excellentcompared to the percentage of families in the assessment area that are moderateincome. The following table illustrates the distribution of home mortgage loanoriginations to borrowers of different income levels within the assessment area.Borrower Distribution of Residential Real Estate Loans in Montgomery and Toombs CountiesAssessment AreaBorrowerIncome LevelLoan TypeHomeMortgagesLowModerateMiddleUpper% of AAFamilies% ofNumber ofLoans% of AAFamilies% ofNumber ofLoans% of AAFamilies% ofNumber ofLoans% of AAFamilies% ofNumber .00%Data Source: 2010 US Census Data. Sample of 20 Home Mortgage Loans Originated in 2015 and 2016.The bank’s lending to low-and moderate-income borrowers was also compared to theaggregate of all lenders reporting data within the assessment area. For 2015,8

Charter Number: 704067aggregate lenders originated 6.33 percent of home mortgages to low-income borrowers,and 17.09 percent to moderate-income borrowers. As indicated in the above table,Vidalia Federal originated 5.0 percent of home mortgage loans to low-income borrowersand 16.17 percent to moderate-income borrowers. Thus, Vidalia Federal’s lending tolow-and moderate-income borrowers in the assessment area is reasonable comparedwith the aggregate percentages for all lenders.Consumer LoansConsumer loan penetration among low- and moderate-income borrowers is reasonableand meets the standards for satisfactory performance. The penetration of consumerloans among low-income borrowers is reasonable compared with the percentage ofhouseholds that are low-income. In addition, penetration among moderate-incomehouseholds is excellent compared with the percentage of households that aremoderate-income. The table below illustrates the penetration of consumer loansoriginated to borrowers of different income levels in the assessment area.Borrower Distribution of Consumer Loans in Montgomery and Toombs Counties Assessment AreaBorrowerIncome LevelLowModerateLoan Type% of AAHouseholds% ofNumberof Loans% of AAHouseholdsConsumerLoans28.68%25.00%16.51%Middle% of% of AANumberHouseholdsof Loans30.00%14.07%Upper% of% of AANumberHouseholdsof Loans25.00%40.74%% ofNumberof Loans20.00%Data Source: 2010 US Census Data. Sample of 20 Consumer Loans Originated in 2015 and 2016.Geographic Distribution of LoansOverall, the distribution of loans among census tracts of different income levels isreasonable in light of demographic comparators and comparison with aggregate lendingdata, and meets the standards for satisfactory performance. There are no low-incomecensus tracts in the assessment area and only two moderate-income tracts.Home MortgagesVidalia Federal’s record of home mortgage lending reflects an excellent dispersion ofloans among moderate-income census tracts in the assessment area, and performanceexceeds standards for satisfactory performance.9

Charter Number: 704067The analysis presented in the following table reflects the dispersion of lending amongcensus tracts of different income levels within the assessment area. The analysiscompares the percentage of home mortgage originations in census tracts of differentincome levels to the percentage of owner-occupied housing units (OOHUs) locatedwithin those areas.Geographic Distribution of Residential Real Estate Loans in Montgomery and Toombs CountiesAssessment AreaCensus TractLowModerateMiddleUpperIncome LevelLoan Type% of AAOwnerOccupiedHousing% ofNumberof Loans% of AAOwnerOccupiedHousing% ofNumberof LoansHome Mortgages0.00%0.00%21.47%25.00%% of AA% ofOwnerNumberOccupiedof LoansHousing57.58%55.00%% of AAOwnerOccupiedHousing% ofNumberof Loans20.95%20.00%Data Source: 2010 US Census Data. Sample of 20 Home Mortgage Loans Originated in 2015 and 2016.Information in the above table shows that Vidalia Federal’s lending in moderate-incomecensus tracts is higher than the OOHUs located in those tracts. The bank’s homemortgage lending among census tracts of different income levels was also analyzed inlight of the aggregate performance of lenders within the assessment area. For 2015,aggregate lenders originated 23.42 percent of home mortgage loans in moderateincomecensus tracts. Given that 25.00 percent of Vidalia Federal’s originations were inmoderate-income census tracts, the bank exceeded the record of aggregate lenders.Consumer LoansConsumer lending levels reflect a reasonable dispersion of lending in the assessmentarea. The analysis compares the percentages of consumer loans originated inmoderate-, middle, and upper-income census tracts to the percentage of totalassessment area households that are located within each census. The table belowillustrates the geographic distribution of consumer loans originated within theassessment area.Geographic Distribution of Consumer Loans in Montgomery and Toombs Counties AssessmentAreaCensus TractLowModerateMiddleUpperIncome LevelLoan TypeConsumerLoans% of% of AA NumberofHouseholdsLoans0.00%0.00%% of% of AA NumberofHouseholdsLoans24.99%15.00%% of AAHouseholds% ofNumberofLoans% of AAHouseholds% ofNumberof Loans54.85%80.00%20.16%5.00%Data Source: 2010 US Census Data. Sample of 20 Consumer Loans Originated in 2015 and 2016.10

Charter Number: 704067As depicted in the above table, the penetration of consumer loans amongmoderateincome census tracts is reasonable when compared to the percentage of totalhouseholds located in moderate-income tracts. It is important to note thatapproximately 28.54 percent of hou