Safe and Sound

First National Bank of Clinton

Clinton, MO
2
Star Rating
First National Bank of Clinton is a Clinton, MO-based, FDIC-insured bank that opened its doors in 1946. As of December 31, 2017, the bank had equity of $6.5 million on assets of $75.9 million.

With 20 full-time employees in 3 offices in MO, the bank currently holds loans and leases worth $40.4 million, including real estate loans of $29.2 million. U.S. bank customers currently have $69.1 million in deposits with the bank.

Overall, Bankrate believes that, as of December 31, 2017, First National Bank of Clinton exhibited a below-average condition, earning 2 out of 5 stars for safety and soundness. Keep reading for a look at how the bank fared on the three important criteria Bankrate used to grade U.S. banks.

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THE INSTITUTION'S SCORE

Capital Score

Capital works as a bulwark against losses and as protection for account holders when a bank is experiencing financial trouble. It follows then that when it comes to measuring an an institution's financial stability, capital is valuable. When it comes to safety and soundness, the higher the capital, the better.

On our test to measure the adequacy of a bank's capital, First National Bank of Clinton received a score of 6 out of a possible 30 points, failing to reach the national average of 13.13.

One essential measure of this buffer is a bank's Tier 1 capital ratio. First National Bank of Clinton's Tier 1 capital ratio was 13.14 percent, exceeding the 6 percent level regulators consider adequate, but less than the national average of 25.65 percent. The higher the capital ratio, the better the bank will be able to weather financial headwinds.

Overall, First National Bank of Clinton held equity amounting to 8.60 percent of its assets, which was lower than the national average of 12.03 percent.

Asset Quality Score

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

A bank with extensive holdings of these kinds of assets may eventually be required to use capital to cover losses, shrinking its equity buffer. Many of those assets are also likely to be in non-accrual status and no longer earning interest for the bank, pushing down earnings and increasing the chances of a future failure.

On Bankrate's test of asset quality, First National Bank of Clinton scored 28 out of a possible 40 points, less than the national average of 37.49 points.

The percentage of problem assets a bank holds compared to its total assets is a useful indicator of asset quality.As of December 31, 2017, 0.60 percent of First National Bank of Clinton'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 to deal with problem assets known as an "allowance for loan and lease losses." How large that reserve is can be a handy 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 of Clinton'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 can be retained by the bank, giving a boost to its capital buffer, or be used to address problematic loans, likely making the bank better able to withstand economic shocks. Banks that are losing money, however, are less able to do those things.

First National Bank of Clinton scored 0 out of a possible 30 on Bankrate's test of earnings, lower than the national average of 15.12.

One widely used measure of a bank's earnings is return on equity, or net income (profit, basically) divided by total equity. The most recent annualized quarterly return on equity for First National Bank of Clinton was -1.45 percent, below the national average of 8.10 percent.

The bank recorded net income of $-125,000 on total equity of $6.5 million for the twelve months ended December 31, 2017. The bank reported an annualized return on average assets, or ROA, of -0.18 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.