Safe and Sound

First National Bank

Waupaca, WI
4
Star Rating
Founded in 1893, First National Bank is an FDIC-insured bank headquartered in Waupaca, WI. The bank has equity of $73.3 million on $444,449,000 in assets, according to June 30, 2017, regulatory filings.

With 111 full-time employees in 9 offices in multiple states, the bank currently holds loans and leases worth $346.5 million, including real estate loans of $316.7 million. U.S. bank customers currently have $369.7 million in deposits with the bank.

Overall, Bankrate believes that, as of June 30, 2017, First National Bank exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Here's a breakdown of how the bank faired on the three key criteria Bankrate used to evaluate American banks.

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THE INSTITUTION'S SCORE

Capital Score

Capital works as a bulwark against losses and affords protection for depositors during times of economic trouble for the bank. It follows then that when it comes to measuring an an institution's financial strength, capital is crucial. From a safety and soundness perspective, the more capital, the better.
First National Bank did better than the national average of 13.38 points on our test to measure capital adequacy, receiving a score of 24 out of a possible 30 points.

A bank's Tier 1 capital ratio is a widely followed measure of this buffer. First National Bank's Tier 1 capital ratio was 20.10 percent, higher than the 6 percent level regulators consider adequate, but under the national average of 25.16 percent. A higher capital ratio suggests the bank will be better able to stand up to financial challenges.

Overall, First National Bank held equity amounting to 16.49 percent of its assets, which exceeded the national average of 12.10 percent.

Asset Quality Score

This test's purpose is to estimate how the bank's capitalization and allocated loan loss reserves could be affected by problem assets, such as past-due mortgages.

A bank with extensive holdings of these types of assets could eventually have to use capital to cover losses, cutting down on its equity buffer. Many of those assets are also likely to be in non-accrual status and thus aren't earning money, reducing earnings and increasing the risk of a future failure.

On Bankrate's asset quality test, First National Bank scored 28 out of a possible 40 points, coming in below the national average of 37.62 points.

The percentage of problem assets a bank holds compared to its total assets is a handy indicator of asset quality.As of June 30, 2017, 5.19 percent of First National Bank'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 1.04 percent.

Banks maintain a reserve to deal with troubled assets known as an "allowance for loan and lease losses." Comparing the how large that reserve is to the total amount of problem loans can be a useful indicator when evaluating a bank's ability to manage troubled assets. Unfortunately, the FDIC did not provide information on First National Bank'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, expanding its capital cushion, or be used to address problematic loans, potentially making the bank better prepared to withstand economic shocks. Banks that are losing money, however, are less able to do those things.

On Bankrate's earnings test, First National Bank scored 10 out of a possible 30, coming in below the national average of 16.52.

Return on equity, calculated by dividing net income (profit, basically) by total equity, is one key measure of a bank's earnings. The most recent annualized quarterly return on equity for First National Bank was 4.48 percent, below the national average of 9.28 percent.

The bank earned net income of $1.6 million on total equity of $73.3 million for the twelve months ended June 30, 2017. The bank experienced an annualized return on average assets, or ROA, of 0.69 percent, below the 1 percent deemed satisfactory in accordance with industry standards and below the average for U.S. banks of 1.14 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.