Safe and Sound

First Financial Bank, National Association

Terre Haute, IN
4
Star Rating
Terre Haute, IN-based First Financial Bank, National Association is an FDIC-insured bank founded in 1863. As of December 31, 2017, the bank had equity of $389.1 million on assets of $2.92 billion.

With 821 full-time employees in 65 offices in multiple states, the bank currently holds loans and leases worth $1.82 billion, including real estate loans of $841.7 million. U.S. bank customers currently have $2.41 billion in deposits with the bank.

Overall, Bankrate believes that, as of December 31, 2017, First Financial Bank, National Association exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Keep reading for a breakdown of how the bank did on the three major criteria Bankrate used to grade U.S. banks.

WHAT IS
SAFE AND SOUND?

Find out

THE INSTITUTION'S SCORE

Capital Score

Capital works as a cushion against losses and affords protection for account holders during times of financial trouble for the bank. Therefore, a bank's level of capital is an essential measurement of a bank's financial resilience. From a safety and soundness perspective, the higher the capital, the better.

On our test to measure capital adequacy, First Financial Bank, National Association scored 16 out of a possible 30 points, above the national average of 13.13.

One essential measure of this buffer is a bank's Tier 1 capital ratio. First Financial Bank, National Association's Tier 1 capital ratio was 16.56 percent, above the 6 percent level considered adequate by regulators, but under the national average of 25.65 percent. A higher capital ratio suggests the bank will be better able to stand up to financial downturns.

Overall, First Financial Bank, National Association held equity amounting to 13.33 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 troubled assets, such as past-due loans.

Having extensive holdings of these types of assets could eventually require a bank to use capital to absorb losses, shrinking its buffer of equity. Many of those assets are also likely to be in non-accrual status and no longer earning interest for the bank, resulting in reduced earnings and potentially more risk of a future failure.

First Financial Bank, National Association scored 36 out of a possible 40 points on Bankrate's asset quality test, lower than the national average of 37.49.

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, 0.88 percent of First Financial 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 keep a reserve known as an "allowance for loan and lease losses" to deal with troubled assets . The size of that reserve can be a widely used indicator when evaluating a bank's ability to manage problem assets, especially when compared to the total amount of problematic loans. Unfortunately, the FDIC did not provide information on First Financial 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 may be retained by the bank, boosting its capital cushion, or be used to deal with problematic loans, likely making the bank better prepared to withstand financial trouble. Banks that are losing money, however, have less ability to do those things.

On Bankrate's test of earnings, First Financial Bank, National Association scored 14 out of a possible 30, lower than the national average of 15.12.

One important 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 Financial Bank, National Association was 6.71 percent, below the national average of 8.10 percent.

The bank reported net income of $26.7 million on total equity of $389.1 million for the twelve months ended December 31, 2017. The bank reported an annualized return on average assets, or ROA, of 0.92 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.