Safe and Sound

First Harrison Bank

Corydon, IN
4
Star Rating
First Harrison Bank is a Corydon, IN-based, FDIC-insured bank founded in 1891. Regulatory filings show the bank having equity of $77.1 million on assets of $761.3 million, as of June 30, 2017.

With 180 full-time employees in 18 offices in multiple states, the bank has amassed loans and leases worth $396.5 million, including real estate loans of $320.5 million. U.S. bank customers currently have $682.0 million in deposits with the bank.

Overall, Bankrate believes that, as of June 30, 2017, First Harrison Bank exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Here's an analysis of how the bank did on the three key criteria Bankrate used to score American banks.

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THE INSTITUTION'S SCORE

Capital Score

Capital is a valuable measurement of a bank's financial resilience. It works as a buffer against losses and affords protection for accountholders when a bank is experiencing economic trouble. From a safety and soundness perspective, more capital is preferred.
First Harrison Bank fell below the national average of 13.38 on our test to measure capital adequacy, racking up 10 out of a possible 30 points.

A bank's Tier 1 capital ratio is a commonly used measure of this buffer. First Harrison Bank's Tier 1 capital ratio was 13.93 percent, exceeding the 6 percent level regulators consider adequate, but less than the national average of 25.16 percent. The higher the capital ratio, the better the bank will be able to stand up to financial difficulties.

Overall, First Harrison Bank held equity amounting to 10.13 percent of its assets, which was lower than the national average of 12.10 percent.

Asset Quality Score

Bankrate uses this test to determine the impact of problem assets, such as unpaid mortgages, on the bank's reserves set aside to cover loan losses, as well as overall capitalization.

Having a large number of these types of assets could eventually require a bank to use capital to absorb losses, decreasing its equity buffer. Many of those assets are also likely to be in non-accrual status and no longer earning money, reducing earnings and increasing the risk of a future failure.

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

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, 0.74 percent of First Harrison 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 1.04 percent.

Banks maintain a reserve to handle problem assets known as an "allowance for loan and lease losses." 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 First Harrison Bank's loan loss allowance in its most recent filings.

Earnings score

How profitable a bank is affects its safety and soundness. Earnings can be retained by the bank, giving a boost to its capital buffer, or be used to deal with problematic loans, potentially making the bank better able to withstand financial trouble. However, banks that are losing money have less ability to do those things.

First Harrison Bank 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, or net income (profit, essentially) divided by the total amount of equity. First Harrison Bank's most recent annualized quarterly return on equity was 9.07 percent, below the national average of 9.28 percent.

For the twelve months ended June 30, 2017, the bank recorded net income of $3.4 million on total equity of $77.1 million. The bank had an annualized return on average assets, or ROA, of 0.90 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.