Safe and Sound

First National Bank of Tennessee

Livingston, TN
5
Star Rating
First National Bank of Tennessee is a Livingston, TN-based, FDIC-insured bank founded in 1965. Regulatory filings show the bank having equity of $79.7 million on assets of $824.8 million, as of June 30, 2017.

With 135 full-time employees in 7 offices in TN, the bank has amassed loans and leases worth $537.8 million, including real estate loans of $435.3 million. U.S. bank customers currently have $732.7 million in deposits with the bank.

Overall, Bankrate believes that, as of June 30, 2017, First National Bank of Tennessee exhibited a superior condition, earning a full 5 stars for safety and soundness. Here's an analysis of how the bank did on the three key criteria Bankrate used to grade U.S. banks on safety and soundness.

WHAT IS
SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

Capital acts as a bulwark against losses and as protection for accountholders when a bank is struggling financially. Therefore, when it comes to measuring an a bank's financial stability, capital is useful. When it comes to safety and soundness, more capital is better.
On our test to measure the adequacy of a bank's capital, First National Bank of Tennessee received a score of 10 out of a possible 30 points, coming in below the national average of 13.38.

A bank's Tier 1 capital ratio is an important measure of this buffer. First National Bank of Tennessee's Tier 1 capital ratio was 14.95 percent, higher than the 6 percent level considered adequate by regulators, but lower than the national average of 25.16 percent. A higher capital ratio means the bank will be better able to weather financial downturns.

Overall, First National Bank of Tennessee held equity amounting to 9.66 percent of its assets, which was lower than the national average of 12.10 percent.

Asset Quality Score

Bankrate uses this test to estimate the effect of problem assets, such as past-due loans, on the bank's reserves set aside to cover loan losses, as well as overall capitalization.

A bank with large numbers of these types of assets may eventually have to use capital to absorb losses, reducing its equity cushion. It also means that there are likely to be many assets that are in non-accrual status and thus aren't earning interest for the bank, reducing earnings and elevating the risk of a failure in the future.

First National Bank of Tennessee scored 40 out of a possible 40 points on Bankrate's asset quality test, beating the national average of 37.62.

The percentage of problem assets a bank holds compared to its total assets is a useful indicator of asset quality.As of June 30, 2017, 0.71 percent of First National Bank of Tennessee's loans were noncurrent, meaning 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 keep a reserve to deal with troubled assets known as an "allowance for loan and lease losses." Comparing the that reserve's size to the total amount of at-risk loans can be a handy indicator when evaluating a bank's ability to manage problem assets. Unfortunately, the FDIC did not provide information on First National Bank of Tennessee'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 may be retained by the bank, increasing its capital cushion, or be used to address problematic loans, potentially making the bank more resilient in tough times. Conversely, losses diminish a bank's ability to do those things.

First National Bank of Tennessee outperformed the average on Bankrate's test of earnings, achieving a score of 22 out of a possible 30.

Return on equity, calculated by dividing net income (profit, basically) by the total amount of equity, is one important way to measure a bank's earnings. First National Bank of Tennessee's most recent annualized quarterly return on equity was 13.21 percent, above the national average of 9.28 percent.

For the twelve months ended June 30, 2017, the bank recorded net income of $5.1 million on total equity of $79.7 million. The bank reported an annualized return on average assets, or ROA, of 1.25 percent, above the 1 percent deemed satisfactory in accordance with industry standards, and above 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.