Safe and Sound

First Southern Bank

Patterson, GA
NR
Star Rating
First Southern Bank is an FDIC-insured bank started in 1907 and currently based in Patterson, GA. Regulatory filings show the bank having equity of $4.6 million on $104.4 million in assets, as of December 31, 2017.

With 36 full-time employees in 3 offices in GA, the bank has amassed loans and leases worth $73.4 million, including real estate loans of $53.4 million. U.S. bank customers currently have $98.9 million in deposits with the bank.

Overall, Bankrate did not have enough information on this institution to give it a star rating. Keep reading for a breakdown of how the bank fared on the three important criteria Bankrate used to grade U.S. banks.

WHAT IS
SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

Capital is an important measurement of a bank's financial resilience. It works as a cushion against losses and provides protection for accountholders during times of financial instability for the bank. When looking at safety and soundness, the higher the capital, the better.

On our test to measure capital adequacy, First Southern Bank received a score of 0 out of a possible 30 points, falling short of the national average of 13.13.

One way to measure this buffer is looking at a bank's Tier 1 capital ratio. First Southern Bank's Tier 1 capital ratio was 5.70 percent, less than the 6 percent level regulators consider adequate, and below 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 Southern Bank held equity amounting to 4.41 percent of its assets, which was lower than the national average of 12.03 percent.

Asset Quality Score

This test is intended to try to understand how the bank's loan loss reserves and overall capitalization could be affected by problem assets, such as past-due loans.

A bank with a large number of these types of assets could eventually be required to use capital to absorb losses, decreasing its equity buffer. It also means that there are likely to be many assets that are in non-accrual status and thus aren't earning money, decreasing earnings and increasing the chances of a future failure.

On Bankrate's test of asset quality, First Southern Bank scored 0 out of a possible 40 points, lower than the national average of 37.49 points.

The percentage of problem assets a bank holds compared to its total assets is a widely used indicator of asset quality.As of December 31, 2017, 3.52 percent of First Southern Bank's loans were noncurrent -- in other words, 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 keep a reserve to handle troubled assets known as an "allowance for loan and lease losses." How large that reserve is 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 Southern Bank's loan loss allowance in its most recent filings.

Earnings score

How profitable a bank is has an effect on its long-term survivability. Earnings may be retained by the bank, expanding its capital cushion, or be used to address problematic loans, potentially making the bank more resilient in times of trouble. Conversely, losses reduce a bank's ability to do those things.

First Southern Bank fell short of the national average on Bankrate's earnings test, achieving a score of 0 out of a possible 30.

One key way to measure a bank's earnings is return on equity, or net income (profit, essentially) divided by total equity. First Southern Bank's most recent annualized quarterly return on equity was -3.67 percent, below the national average of 8.10 percent.

The bank earned net income of $-176,000 on total equity of $4.6 million for the twelve months ended December 31, 2017. The bank experienced an annualized return on average assets, or ROA, of -0.17 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.