Safe and Sound

BTH Bank, National Association

Quitman, TX
5
Star Rating
Started in 1914, BTH Bank, National Association is an FDIC-insured bank headquartered in Quitman, TX. Regulatory filings show the bank having equity of $205.5 million on $1.68 billion in assets, as of December 31, 2017.

U.S. bank customers have $1.47 billion on deposit at 13 offices in TX run by 110 full-time employees. With that footprint, the bank holds loans and leases worth $1.06 billion, $638.4 million of which are for real estate.

Overall, Bankrate believes that, as of December 31, 2017, BTH Bank, National Association exhibited a superior condition, earning a full 5 stars for safety and soundness. Here's a look at how the bank fared 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

When it comes to measuring an a bank's financial strength, capital is crucial. It acts as a cushion against losses and affords protection for depositors when a bank is experiencing financial instability. When looking at safety and soundness, more capital is preferred.

BTH Bank, National Association scored 16 out of a possible 30 points on our test to measure the adequacy of a bank's capital, beating the national average of 13.13.

A bank's Tier 1 capital ratio is an essential measure of this buffer. BTH Bank, National Association's Tier 1 capital ratio was 17.30 percent, above the 6 percent level regulators consider adequate, but lower than the national average of 25.65 percent. The higher the capital ratio, the better the bank will be able to weather economic headwinds.

Overall, BTH Bank, National Association held equity amounting to 12.21 percent of its assets, which exceeded the national average of 12.03 percent.

Asset Quality Score

This test's purpose is to try to understand how the bank's reserves set aside to cover loan losses, as well as overall capitalization, could be affected by problem assets, such as past-due loans.

Having extensive holdings of these kinds of assets suggests a bank could have 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 interest for the bank, decreasing earnings and increasing the chances of a future failure.

On Bankrate's asset quality test, BTH Bank, National Association scored 40 out of a possible 40 points, beating the national average of 37.49 points.

The percentage of problem assets a bank holds compared to its total assets is a helpful indicator of asset quality.As of December 31, 2017, 0.68 percent of BTH Bank, National Association'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 1.01 percent.

Banks maintain a reserve to handle problem assets known as an "allowance for loan and lease losses." That reserve's size can be a helpful 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 BTH Bank, National Association'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, boosting its capital buffer, or be used to address problematic loans, likely making the bank more resilient in times of trouble. Losses, on the other hand, take away from a bank's ability to do those things.

BTH Bank, National Association did below-average on Bankrate's earnings test, achieving a score of 14 out of a possible 30.

Return on equity, calculated by dividing net income (profit, basically) by total equity, is one important way to measure a bank's earnings. The most recent annualized quarterly return on equity for BTH Bank, National Association was 8.88 percent, above the national average of 8.10 percent.

The bank earned net income of $13.7 million on total equity of $205.5 million for the twelve months ended December 31, 2017. The bank reported an annualized return on average assets, or ROA, of 0.96 percent, below the 1 percent deemed satisfactory in accordance with industry standards and below the average for U.S. banks of 1.00 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.