Safe and Sound

First National Bank in Pinckneyville

Pinckneyville, IL
5
Star Rating
Pinckneyville, IL-based First National Bank in Pinckneyville is an FDIC-insured bank founded in 1901. The bank has equity of $15.2 million on assets of $102.2 million, according to December 31, 2017, regulatory filings.

Thanks to the work of 25 full-time employees, the bank currently holds loans and leases worth $35.6 million, $29.7 million of which are for real estate. The bank currently holds $80.0 million in deposits from U.S. customers.

Overall, Bankrate believes that, as of December 31, 2017, First National Bank in Pinckneyville exhibited a superior condition, earning a full 5 stars for safety and soundness. Keep reading for a breakdown of how the bank did 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 is a key measurement of a bank's financial fortitude. It works as a buffer against losses and affords protection for accountholders during periods of financial instability for the bank. When it comes to safety and soundness, more capital is better.

First National Bank in Pinckneyville exceeded the national average of 13.13 points on our test to measure the adequacy of a bank's capital, racking up 20 out of a possible 30 points.

A bank's Tier 1 capital ratio is a commonly used measure of this buffer. First National Bank in Pinckneyville's Tier 1 capital ratio was 34.14 percent, exceeding the 6 percent level regulators consider adequate, and above the national average of 25.65 percent. A higher capital ratio means the bank will be better able to weather economic challenges.

Overall, First National Bank in Pinckneyville held equity amounting to 14.84 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 capitalization and allocated loan loss reserves could be affected by problem assets, such as past-due loans.

A bank with lots of these kinds of assets may eventually have to use capital to absorb losses, diminishing its equity cushion. It also means that there are likely to be many assets that are in non-accrual status and no longer earning interest for the bank, diminishing earnings and elevating the chances of a failure in the future.

First National Bank in Pinckneyville beat out the national average of 37.49 on Bankrate's asset quality test, racking up 40 out of a possible 40 points .

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, 0.94 percent of First National Bank in Pinckneyville's loans were noncurrent -- in other words, 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 problem assets . That reserve's size can be a useful indicator when evaluating a bank's ability to manage troubled assets, especially when compared to the total amount of at-risk loans. Unfortunately, the FDIC did not provide information on First National Bank in Pinckneyville'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, giving a boost to its capital cushion, or use them to deal with problematic loans, likely making the bank more resilient in tough times. However, banks that are losing money have less ability to do those things.

First National Bank in Pinckneyville scored 16 out of a possible 30 on Bankrate's test of earnings, beating the national average of 15.12.

Return on equity, calculated by dividing net income (profit, essentially) by the total amount of equity, is one important way to measure a bank's earnings. First National Bank in Pinckneyville's most recent annualized quarterly return on equity was 7.92 percent, below the national average of 8.10 percent.

The bank reported net income of $1.2 million on total equity of $15.2 million for the twelve months ended December 31, 2017. The bank experienced an annualized return on average assets, or ROA, of 1.28 percent, above the 1 percent deemed satisfactory in accordance with industry standards, and above 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.