Safe and Sound

First National Bank and Trust Co. of Bottineau

Bottineau, ND
4
Star Rating
Bottineau, ND-based First National Bank and Trust Co. of Bottineau is an FDIC-insured bank started in 1906. As of December 31, 2017, the bank had equity of $16.6 million on assets of $140.9 million.

With 25 full-time employees, the bank has amassed loans and leases worth $88.3 million, including real estate loans of $43.5 million. U.S. bank customers currently have $123.5 million in deposits with the bank.

Overall, Bankrate believes that, as of December 31, 2017, First National Bank and Trust Co. of Bottineau exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Here's a breakdown of how the bank fared on the three important criteria Bankrate used to evaluate U.S. banks.

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THE INSTITUTION'S SCORE

Capital Score

Capital works as a buffer against losses and provides protection for depositors when a bank is experiencing financial trouble. Therefore, a bank's level of capital is an important measurement of a bank's financial strength. When it comes to safety and soundness, the higher the capital, the better.

On our test to measure capital adequacy, First National Bank and Trust Co. of Bottineau racked up 14 out of a possible 30 points, beating out the national average of 13.13.

One widely used measure of this buffer is a bank's Tier 1 capital ratio. First National Bank and Trust Co. of Bottineau's Tier 1 capital ratio was 17.03 percent, above the 6 percent level considered adequate by regulators, but lower than the national average of 25.65 percent. The higher the capital ratio, the better the bank will be able to stand up to economic challenges.

Overall, First National Bank and Trust Co. of Bottineau held equity amounting to 11.75 percent of its assets, which was lower than the national average of 12.03 percent.

Asset Quality Score

This test's purpose is to try to understand how the bank's loan loss reserves and overall capitalization could be affected by troubled assets, such as unpaid mortgages.

Having large numbers of these kinds of assets means a bank could have to use capital to absorb losses, diminishing its buffer of equity. It also means that there are likely to be many assets that are in non-accrual status and thus aren't earning money, resulting in depressed earnings and potentially more risk of a future failure.

First National Bank and Trust Co. of Bottineau scored 32 out of a possible 40 points on Bankrate's asset quality test, coming in below the national average of 37.49.

A useful indicator of asset quality is the percentage of problem assets a bank holds compared to its total assets. As of December 31, 2017, 5.18 percent of First National Bank and Trust Co. of Bottineau's loans were noncurrent, meaning they were more than 90 days past due or were in non-accrual status. That's above the national average of 1.01 percent.

Banks maintain a reserve known as an "allowance for loan and lease losses" to deal with troubled assets . The size of that reserve can be a helpful indicator when evaluating a bank's ability to manage troubled assets, especially when compared to the total amount of problem loans. Unfortunately, the FDIC did not provide information on First National Bank and Trust Co. of Bottineau's loan loss allowance in its most recent filings.

Earnings score

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

First National Bank and Trust Co. of Bottineau scored 10 out of a possible 30 on Bankrate's earnings test, failing to reach the national average of 15.12.

One important way to measure a bank's earnings is return on equity, calculated by dividing net income (profit, essentially) by total equity. First National Bank and Trust Co. of Bottineau's most recent annualized quarterly return on equity was 5.01 percent, below the national average of 8.10 percent.

For the twelve months ended December 31, 2017, the bank earned net income of $819,000 on total equity of $16.6 million. The bank experienced an annualized return on average assets, or ROA, of 0.56 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.