Safe and Sound

First Capital Bank

Quanah, TX
4
Star Rating
First Capital Bank is a Quanah, TX-based, FDIC-insured bank started in 1907. Regulatory filings show the bank having equity of $5.0 million on assets of $61.7 million, as of December 31, 2017.

U.S. bank customers have $50.9 million on deposit at 2 offices in TX run by 22 full-time employees. With that footprint, the bank currently holds loans and leases worth $54.6 million, including $27.2 million worth of real estate loans.

Overall, Bankrate believes that, as of December 31, 2017, First Capital Bank exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Here's a look at how the bank did on the three major criteria Bankrate used to grade U.S. banks.

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THE INSTITUTION'S SCORE

Capital Score

When it comes to measuring an an institution's financial strength, capital is key. It works as a buffer against losses and provides protection for depositors when a bank is experiencing economic trouble. From a safety and soundness perspective, more capital is preferred.

First Capital Bank received a score of 8 out of a possible 30 points on our test to measure capital adequacy, less than the national average of 13.13.

A bank's Tier 1 capital ratio is an essential measure of this buffer. First Capital Bank's Tier 1 capital ratio was 9.86 percent, higher than the 6 percent level considered adequate by regulators, but under the national average of 25.65 percent. The higher the capital ratio, the better the bank will be able to weather financial headwinds.

Overall, First Capital Bank held equity amounting to 8.03 percent of its assets, which was lower than the national average of 12.03 percent.

Asset Quality Score

This test is intended to estimate how the bank's capitalization and allocated loan loss reserves could be affected by troubled assets, such as unpaid mortgages.

Having lots of these types of assets suggests a bank could have to use capital to absorb losses, reducing its buffer of equity. Many of those assets are also likely to be in non-accrual status and thus aren't earning money, reducing earnings and elevating the risk of a future failure.

First Capital Bank finished below the national average of 37.49 on Bankrate's asset quality test, racking up 36 out of a possible 40 points .

A widely used indicator of asset quality is the percentage of problem assets a bank holds compared to its total assets. As of December 31, 2017, 0.39 percent of First Capital 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 1.01 percent.

Banks keep a reserve to deal with troubled assets known as an "allowance for loan and lease losses." Comparing the reserve's size to the total amount of problem 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 Capital Bank's loan loss allowance in its most recent filings.

Earnings score

A bank's profitability affects its long-term survivability. A bank can retain its earnings, expanding its capital buffer, or put them to work addressing problematic loans, likely making the bank better able to withstand financial trouble. Losses, on the other hand, diminish a bank's ability to do those things.

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

One widely used measure of a bank's earnings is return on equity, calculated by dividing net income (profit, essentially) by the total amount of equity. The most recent annualized quarterly return on equity for First Capital Bank was 6.03 percent, below the national average of 8.10 percent.

The bank reported net income of $299,000 on total equity of $5.0 million for the twelve months ended December 31, 2017. The bank reported an annualized return on average assets, or ROA, of 0.54 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.