Safe and Sound

First National Community Bank

New Richmond, WI
4
Star Rating
Started in 1919, First National Community Bank is an FDIC-insured bank headquartered in New Richmond, WI. The bank has equity of $18.4 million on assets of $197.7 million, according to June 30, 2017, regulatory filings.

Thanks to the work of 61 full-time employees in 5 offices in WI, the bank currently holds loans and leases worth $125.6 million, including $101.2 million worth of real estate loans. U.S. bank customers currently have $178.4 million in deposits with the bank.

Overall, Bankrate believes that, as of June 30, 2017, First National Community Bank 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 important criteria Bankrate used to evaluate American banks.

WHAT IS
SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

Capital is an essential measurement of a bank's financial resilience. It acts as a buffer against losses and as protection for accountholders when a bank is experiencing economic trouble. When it comes to safety and soundness, more capital is preferred.
On our test to measure the adequacy of a bank's capital, First National Community Bank received a score of 8 out of a possible 30 points, failing to reach the national average of 13.38.

A bank's Tier 1 capital ratio is a widely followed measure of this buffer. First National Community Bank's Tier 1 capital ratio was 13.40 percent, higher than 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 stand up to financial downturns.

Overall, First National Community Bank held equity amounting to 9.28 percent of its assets, which was lower than the national average of 12.10 percent.

Asset Quality Score

This test is intended to estimate how the bank's reserves set aside to cover loan losses, as well as overall capitalization could be affected by troubled assets, such as unpaid loans.

A bank with extensive holdings of these types of assets may eventually be required to use capital to cover losses, decreasing its cushion of equity. Many of those assets are also likely to be in non-accrual status and no longer earning money, resulting in diminished earnings and potentially more risk of a future failure.

First National Community Bank did better than the national average of 37.62 on Bankrate's test of asset quality, racking up 40 out of a possible 40 points .

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, 0.97 percent of First National Community 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." Comparing the how large that reserve is to the total amount of problematic loans can be a widely used indicator when evaluating a bank's ability to manage troubled assets. Unfortunately, the FDIC did not provide information on First National Community Bank's loan loss allowance in its most recent filings.

Earnings score

A bank's ability to earn money has an effect on its safety and soundness. A bank can retain its earnings, boosting its capital cushion, or put them to work addressing problematic loans, likely making the bank more resilient in times of trouble. Losses, on the other hand, diminish a bank's ability to do those things.

First National Community Bank underperformed the average on Bankrate's earnings test, achieving a score of 16 out of a possible 30.

One key way to measure a bank's earnings is return on equity, or net income (profit, basically) divided by total equity. The most recent annualized quarterly return on equity for First National Community Bank was 8.01 percent, below the national average of 9.28 percent.

The bank recorded net income of $716,000 on total equity of $18.4 million for the twelve months ended June 30, 2017. The bank experienced an annualized return on average assets, or ROA, of 0.73 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.