Safe and Sound

First Security Bank of Helena

Helena, MT
4
Star Rating
First Security Bank of Helena is a Helena, MT-based, FDIC-insured bank that opened its doors in 1970. As of December 31, 2017, the bank held equity of $7.5 million on $49.5 million in assets.

With 10 full-time employees, the bank holds loans and leases worth $33.8 million, including real estate loans of $25.0 million. U.S. bank customers currently have $41.7 million in deposits with the bank.

Overall, Bankrate believes that, as of December 31, 2017, First Security Bank of Helena 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 major criteria Bankrate used to grade American banks.

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THE INSTITUTION'S SCORE

Capital Score

Capital is a key measurement of an institution's financial fortitude. It works as a buffer against losses and provides protection for depositors when a bank is struggling financially. When it comes to safety and soundness, the more capital, the better.

First Security Bank of Helena did better than the national average of 13.13 points on our test to measure the adequacy of a bank's capital, scoring 16 out of a possible 30 points.

A bank's Tier 1 capital ratio is an important measure of this buffer. First Security Bank of Helena's Tier 1 capital ratio was 20.45 percent, higher than the 6 percent level considered adequate by regulators, but lower than the national average of 25.65 percent. A higher capital ratio means the bank will be better able to weather economic headwinds.

Overall, First Security Bank of Helena held equity amounting to 15.15 percent of its assets, which exceeded the national average of 12.03 percent.

Asset Quality Score

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

Having extensive holdings of these kinds of assets may eventually require a bank to use capital to absorb losses, cutting down on its equity cushion. Many of those assets are also likely to be in non-accrual status and thus aren't earning money, resulting in lower earnings and potentially more risk of a future failure.

On Bankrate's test of asset quality, First Security Bank of Helena scored 32 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 helpful indicator of asset quality.As of December 31, 2017, 1.67 percent of First Security Bank of Helena'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 to handle troubled assets known as an "allowance for loan and lease losses." The size of that reserve 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 Security Bank of Helena's loan loss allowance in its most recent filings.

Earnings score

A bank's earnings performance affects its safety and soundness. A bank can retain its earnings, increasing its capital cushion, or put them to work addressing problematic loans, likely making the bank better prepared to withstand financial trouble. However, banks that are losing money are less able to do those things.

First Security Bank of Helena did below-average on Bankrate's earnings test, achieving a score of 8 out of a possible 30.

Return on equity, calculated by dividing net income (profit, basically) by total equity, is one widely used measure of a bank's earnings. The most recent annualized quarterly return on equity for First Security Bank of Helena was 3.23 percent, below the national average of 8.10 percent.

For the twelve months ended December 31, 2017, the bank earned net income of $238,000 on total equity of $7.5 million. The bank reported an annualized return on average assets, or ROA, of 0.49 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.