Safe and Sound

First US Bank

Thomasville, AL
4
Star Rating
First US Bank is an FDIC-insured bank started in 1952 and currently based in Thomasville, AL. The bank has equity of $77.8 million on $615,891,000 in assets, according to June 30, 2017, regulatory filings.

Thanks to the efforts of 256 full-time employees in 15 offices in AL, the bank currently holds loans and leases worth $330.5 million, including $186.8 million worth of real estate loans. U.S. bank customers currently have $509.4 million in deposits with the bank.

Overall, Bankrate believes that, as of June 30, 2017, First US Bank exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Keep reading for a look at how the bank did on the three major criteria Bankrate used to score American banks.

WHAT IS
SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

Capital works as a bulwark against losses and as protection for accountholders when a bank is struggling financially. It follows then that when it comes to measuring an a bank's financial fortitude, capital is useful. When looking at safety and soundness, more capital is preferred.
On our test to measure capital adequacy, First US Bank scored 16 out of a possible 30 points, above the national average of 13.38.

One way to measure this buffer is looking at a bank's Tier 1 capital ratio. First US Bank's Tier 1 capital ratio was 18.88 percent, higher than the 6 percent level considered adequate by regulators, 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 downturns.

Overall, First US Bank held equity amounting to 12.64 percent of its assets, which exceeded the national average of 12.10 percent.

Asset Quality Score

In this test, Bankrate tries to estimate the impact of problem assets, such as unpaid mortgages, on the bank's loan loss reserves and overall capitalization.

A bank with large numbers of these kinds of assets could eventually have to use capital to cover losses, shrinking its equity buffer. Many of those assets are also likely to be in non-accrual status and thus aren't earning money, resulting in reduced earnings and potentially more risk of a failure in the future.

On Bankrate's asset quality test, First US Bank scored 36 out of a possible 40 points, lower than the national average of 37.62 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, 0.55 percent of First US Bank'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 maintain a reserve to handle troubled assets known as an "allowance for loan and lease losses." How large that reserve is can be a handy indicator when evaluating a bank's ability to manage problem assets, especially when compared to the total amount of problem loans. Unfortunately, the FDIC did not provide information on First US Bank's loan loss allowance in its most recent filings.

Earnings score

How profitable a bank is affects its long-term survivability. Earnings can be retained by the bank, expanding its capital cushion, or be used to address problematic loans, likely making the bank better prepared to withstand economic shocks. Conversely, losses diminish a bank's ability to do those things.

First US Bank scored 8 out of a possible 30 on Bankrate's earnings test, lower than the national average of 16.52.

One important way to measure a bank's earnings is return on equity, calculated by dividing net income (profit, essentially) by total equity. The most recent annualized quarterly return on equity for First US Bank was 3.12 percent, below the national average of 9.28 percent.

The bank earned net income of $1.2 million on total equity of $77.8 million for the twelve months ended June 30, 2017. The bank had an annualized return on average assets, or ROA, of 0.39 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.