Safe and Sound

First Community Financial Bank

Joliet, IL
3
Star Rating
Joliet, IL-based First Community Financial Bank is an FDIC-insured bank founded in 2008. As of June 30, 2017, the bank held equity of $129.9 million on assets of $1.39 billion.

U.S. bank customers have $1.14 billion on deposit at 10 offices in IL run by 140 full-time employees. With that footprint, the bank currently holds loans and leases worth $1.10 billion, $786.6 million of which are for real estate.

Overall, Bankrate believes that, as of June 30, 2017, First Community Financial Bank exhibited a superior condition, earning a full 5 stars for safety and soundness. Keep reading for a breakdown of how the bank faired on the three major criteria Bankrate used to evaluate U.S. banks on safety and soundness.

WHAT IS
SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

Capital works as a buffer against losses and as protection for accountholders during periods of economic trouble for the bank. It follows then that a bank's level of capital is a crucial measurement of an institution's financial strength. From a safety and soundness perspective, more capital is preferred.
First Community Financial Bank received a score of 10 out of a possible 30 points on our test to measure capital adequacy, lower than the national average of 13.38.

One widely used measure of this buffer is a bank's Tier 1 capital ratio. First Community Financial Bank's Tier 1 capital ratio was 10.79 percent, exceeding the 6 percent level regulators consider adequate, but under the national average of 25.16 percent. The higher the capital ratio, the better the bank will be able to stand up to financial challenges.

Overall, First Community Financial Bank held equity amounting to 9.35 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 loan loss reserves and overall capitalization could be affected by troubled assets, such as past-due loans.

Having a large number of these types of assets suggests a bank may eventually have to use capital to absorb losses, shrinking its cushion of equity. 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 Community Financial Bank scored 40 out of a possible 40 points on Bankrate's test of asset quality, beating the national average of 37.62.

The percentage of problem assets a bank holds compared to its total assets is a handy indicator of asset quality.As of June 30, 2017, 0.62 percent of First Community Financial 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 deal with problem assets known as an "allowance for loan and lease losses." Comparing the the size of that reserve to the total amount of problematic loans can be a helpful indicator when evaluating a bank's ability to manage troubled assets. Unfortunately, the FDIC did not provide information on First Community Financial 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. Earnings can be retained by the bank, giving a boost to its capital cushion, or be used to deal with problematic loans, likely making the bank better able to withstand financial shocks. Conversely, losses diminish a bank's ability to do those things.

On Bankrate's earnings test, First Community Financial Bank scored 22 out of a possible 30, exceeding the national average of 16.52.

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 Community Financial Bank's most recent annualized quarterly return on equity was 12.86 percent, above the national average of 9.28 percent.

For the twelve months ended June 30, 2017, the bank recorded net income of $8.3 million on total equity of $129.9 million. The bank had 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.