Safe and Sound

First Bank Richmond

Richmond, IN
4
Star Rating
Richmond, IN-based First Bank Richmond is an FDIC-insured bank founded in 1887. The bank has equity of $75.7 million on $716,415,000 in assets, according to June 30, 2017, regulatory filings.

Thanks to the efforts of 172 full-time employees in 13 offices in multiple states, the bank has amassed loans and leases worth $508.5 million, including $349.9 million worth of real estate loans. The bank currently holds $544.3 million in deposits from U.S. customers.

Overall, Bankrate believes that, as of June 30, 2017, First Bank Richmond exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Keep reading for an analysis of how the bank faired on the three major criteria Bankrate used to score U.S. banks.

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THE INSTITUTION'S SCORE

Capital Score

Capital is an essential measurement of an institution's financial resilience. It acts as a cushion against losses and as protection for accountholders during periods of economic trouble for the bank. From a safety and soundness perspective, the more capital, the better.
On our test to measure capital adequacy, First Bank Richmond received a score of 12 out of a possible 30 points, coming in below the national average of 13.38.

One important measure of this buffer is a bank's Tier 1 capital ratio. First Bank Richmond's Tier 1 capital ratio was 12.54 percent, above the 6 percent level regulators consider adequate, but lower than the national average of 25.16 percent. The higher the capital ratio, the better the bank will be able to weather financial challenges.

Overall, First Bank Richmond held equity amounting to 10.57 percent of its assets, which was lower than the national average of 12.10 percent.

Asset Quality Score

This test's purpose is to try to understand how the bank's loan loss reserves and overall capitalization could be affected by problem assets, such as unpaid loans.

Having lots of these types of assets suggests a bank may eventually have to use capital to cover losses, diminishing its equity cushion. It also means that there are likely to be many assets that are in non-accrual status and no longer earning money, resulting in lower earnings and potentially more risk of a future failure.

First Bank Richmond fell below the national average of 37.62 on Bankrate's test of asset quality, racking up 36 out of a possible 40 points .

The percentage of problem assets a bank holds compared to its total assets is a helpful indicator of asset quality.As of June 30, 2017, 1.27 percent of First Bank Richmond'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 keep a reserve to deal with problem assets known as an "allowance for loan and lease losses." Comparing the the size of that reserve to the total amount of problematic loans can be a helpful indicator when evaluating a bank's ability to manage problem assets. Unfortunately, the FDIC did not provide information on First Bank Richmond's loan loss allowance in its most recent filings.

Earnings score

How profitable a bank is has an effect on its safety and soundness. Earnings can be retained by the bank, expanding its capital buffer, or be used to address problematic loans, likely making the bank more resilient in tough times. Obviously, banks that are losing money are less able to do those things.

On Bankrate's test of earnings, First Bank Richmond scored 12 out of a possible 30, falling short of the national average of 16.52.

Return on equity, calculated by dividing net income (essentially, profit) by total equity, is one important way to measure a bank's earnings. The most recent annualized quarterly return on equity for First Bank Richmond was 5.20 percent, below the national average of 9.28 percent.

The bank reported net income of $1.9 million on total equity of $75.7 million for the twelve months ended June 30, 2017. The bank reported an annualized return on average assets, or ROA, of 0.55 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.