Safe and Sound

1st Bank in Hominy

Hominy, OK
4
Star Rating
1st Bank in Hominy is a Hominy, OK-based, FDIC-insured bank dating back to 1906. The bank has equity of $3.4 million on assets of $42.8 million, according to June 30, 2017, regulatory filings.

Thanks to the work of 14 full-time employees, the bank has amassed loans and leases worth $18.3 million, $7.9 million of which are for real estate. The bank currently holds $38.2 million in deposits from U.S. customers.

Overall, Bankrate believes that, as of June 30, 2017, 1st Bank in Hominy exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Here's a breakdown of how the bank faired on the three important criteria Bankrate used to score U.S. banks.

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THE INSTITUTION'S SCORE

Capital Score

Capital acts as a buffer against losses and as protection for depositors during times of financial trouble for the bank. Therefore, when it comes to measuring an a bank's financial resilience, capital is important. When looking at safety and soundness, the higher the capital, the better.
1st Bank in Hominy received a score of 8 out of a possible 30 points on our test to measure the adequacy of a bank's capital, less than the national average of 13.38.

A bank's Tier 1 capital ratio is an essential measure of this buffer. 1st Bank in Hominy's Tier 1 capital ratio was 19.23 percent, exceeding the 6 percent level regulators consider adequate, but less than the national average of 25.16 percent. A higher capital ratio suggests the bank will be better able to stand up to financial challenges.

Overall, 1st Bank in Hominy held equity amounting to 8.01 percent of its assets, which was lower than the national average of 12.10 percent.

Asset Quality Score

In this test, Bankrate tries to estimate the impact of troubled assets, such as unpaid mortgages, on the bank's reserves set aside to cover loan losses, as well as overall capitalization.

A bank with a large number of these kinds of assets could eventually be forced to use capital to cover losses, reducing its equity buffer. It also means that there are likely to be many assets that are in non-accrual status and thus aren't earning money, diminishing earnings and increasing the chances of a future failure.

1st Bank in Hominy scored 36 out of a possible 40 points on Bankrate's test of asset quality, below the national average of 37.62.

A useful indicator of asset quality is the percentage of problem assets a bank holds compared to its total assets. As of June 30, 2017, 1.88 percent of 1st Bank in Hominy's loans were noncurrent -- in other words, they were more than 90 days past due or were in non-accrual status. That's above the national average of 1.04 percent.

Banks maintain a reserve known as an "allowance for loan and lease losses" to deal with problem assets . How large that reserve is can be a widely used indicator when evaluating a bank's ability to manage troubled assets, especially when compared to the total amount of problematic loans. Unfortunately, the FDIC did not provide information on 1st Bank in Hominy's loan loss allowance in its most recent filings.

Earnings score

How profitable a bank is affects its safety and soundness. A bank can retain its earnings, boosting its capital cushion, or put them to work addressing problematic loans, potentially making the bank better prepared to withstand economic trouble. Conversely, losses take away from a bank's ability to do those things.

1st Bank in Hominy outperformed the average on Bankrate's earnings test, achieving a score of 18 out of a possible 30.

One key measure of a bank's earnings is return on equity, calculated by dividing net income (profit, essentially) by the total amount of equity. The most recent annualized quarterly return on equity for 1st Bank in Hominy was 8.36 percent, below the national average of 9.28 percent.

For the twelve months ended June 30, 2017, the bank earned net income of $141,000 on total equity of $3.4 million. The bank experienced an annualized return on average assets, or ROA, of 0.67 percent, below the 1 percent deemed satisfactory in accordance with industry standards and below the average for U.S. banks of 1.14 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.