Asset Quality Score
In this test, Bankrate tries to estimate the impact of troubled assets, such as past-due loans, on the bank's capitalization and allocated loan loss reserves.
A bank with large numbers of these kinds of assets may eventually be required to use capital to absorb 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, decreasing earnings and elevating the chances of a failure in the future.
First Neighbor Bank, National Association scored 32 out of a possible 40 points on Bankrate's test of asset quality, coming in below the national average of 37.49.
A widely used indicator of asset quality is the percentage of problem assets a bank holds compared to its total assets. As of December 31, 2017, 2.77 percent of First Neighbor Bank, National Association'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 problem assets . The size of that reserve can be a widely used indicator when evaluating a bank's ability to manage problem assets, especially when compared to the total amount of problem loans. Unfortunately, the FDIC did not provide information on First Neighbor Bank, National Association's loan loss allowance in its most recent filings.