Safe and Sound

First National Bank in Howell

Howell, MI
4
Star Rating
First National Bank in Howell is a Howell, MI-based, FDIC-insured bank started in 1934. Regulatory filings show the bank having equity of $42.0 million on $399.1 million in assets, as of December 31, 2017.

Thanks to the work of 90 full-time employees in 9 offices in MI, the bank holds loans and leases worth $263.5 million, $204.4 million of which are for real estate. U.S. bank customers currently have $350.7 million in deposits with the bank.

Overall, Bankrate believes that, as of December 31, 2017, First National Bank in Howell 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 key criteria Bankrate used to evaluate U.S. banks.

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THE INSTITUTION'S SCORE

Capital Score

Capital is a crucial measurement of an institution's financial fortitude. It acts as a buffer against losses and provides protection for accountholders during periods of financial instability for the bank. When looking at safety and soundness, the more capital, the better.

On our test to measure the adequacy of a bank's capital, First National Bank in Howell received a score of 12 out of a possible 30 points, falling short of the national average of 13.13.

One widely followed measure of this buffer is a bank's Tier 1 capital ratio. First National Bank in Howell's Tier 1 capital ratio was 12.70 percent, exceeding the 6 percent level considered adequate by regulators, but below the national average of 25.65 percent. A higher capital ratio means the bank will be better able to stand up to economic downturns.

Overall, First National Bank in Howell held equity amounting to 10.53 percent of its assets, which was lower than the national average of 12.03 percent.

Asset Quality Score

In this test, Bankrate tries to determine the impact of problem assets, such as past-due mortgages, on the bank's loan loss reserves and overall capitalization.

Having extensive holdings of these types of assets could eventually force 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 money, decreasing earnings and increasing the chances of a failure in the future.

First National Bank in Howell scored 40 out of a possible 40 points on Bankrate's asset quality test, beating the national average of 37.49.

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, 0.80 percent of First National Bank in Howell'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 known as an "allowance for loan and lease losses" to deal with troubled assets . How large that reserve is can be a helpful indicator when evaluating a bank's ability to manage problem assets, especially when compared to the total amount of at-risk loans. Unfortunately, the FDIC did not provide information on First National Bank in Howell's loan loss allowance in its most recent filings.

Earnings score

A bank's profitability has an effect on its safety and soundness. Earnings may be retained by the bank, increasing its capital buffer, or be used to address problematic loans, potentially making the bank better prepared to withstand financial trouble. Conversely, losses lessen a bank's ability to do those things.

On Bankrate's test of earnings, First National Bank in Howell scored 4 out of a possible 30, 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 (essentially profit) by total equity. The most recent annualized quarterly return on equity for First National Bank in Howell was 1.34 percent, below the national average of 8.10 percent.

The bank earned net income of $565,000 on total equity of $42.0 million for the twelve months ended December 31, 2017. The bank experienced an annualized return on average assets, or ROA, of 0.14 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.