Safe and Sound

First State Bank of Ben Wheeler, Texas

Ben Wheeler, TX
5
Star Rating
Ben Wheeler, TX-based First State Bank of Ben Wheeler, Texas is an FDIC-insured bank started in 1911. Regulatory filings show the bank having equity of $18.3 million on assets of $147.3 million, as of December 31, 2017.

U.S. bank customers have $127.7 million on deposit at 4 offices in TX run by 34 full-time employees. With that footprint, the bank holds loans and leases worth $71.6 million, $50.4 million of which are for real estate.

Overall, Bankrate believes that, as of December 31, 2017, First State Bank of Ben Wheeler, Texas exhibited a superior condition, earning a full 5 stars for safety and soundness. Here's an analysis of how the bank fared on the three important criteria Bankrate used to evaluate American banks on safety and soundness.

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THE INSTITUTION'S SCORE

Capital Score

Capital works as a bulwark against losses and provides protection for depositors during periods of economic trouble for the bank. Therefore, when it comes to measuring an a bank's financial resilience, capital is valuable. From a safety and soundness perspective, more capital is better.

First State Bank of Ben Wheeler, Texas beat out the national average of 13.13 points on our test to measure capital adequacy, racking up 16 out of a possible 30 points.

A bank's Tier 1 capital ratio is an important measure of this buffer. First State Bank of Ben Wheeler, Texas's Tier 1 capital ratio was 23.38 percent, above the 6 percent level considered adequate by regulators, but below the national average of 25.65 percent. The higher the capital ratio, the better the bank will be able to weather financial challenges.

Overall, First State Bank of Ben Wheeler, Texas held equity amounting to 12.45 percent of its assets, which exceeded the national average of 12.03 percent.

Asset Quality Score

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

A bank with lots of these types of assets may eventually be required to use capital to absorb losses, shrinking its equity buffer. It also means that there are likely to be many assets that are in non-accrual status and no longer earning money, resulting in lower earnings and potentially more risk of a future failure.

First State Bank of Ben Wheeler, Texas scored above the national average of 37.49 on Bankrate's asset quality test, racking up 40 out of a possible 40 points .

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, 0.18 percent of First State Bank of Ben Wheeler, Texas's loans were noncurrent -- in other words, 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 maintain a reserve known as an "allowance for loan and lease losses" to deal with troubled assets . That reserve's size can be a helpful indicator when evaluating a bank's ability to manage troubled assets, especially when compared to the total amount of problematic loans. Unfortunately, the FDIC did not provide information on First State Bank of Ben Wheeler, Texas'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, expanding its capital cushion, or be used to address problematic loans, potentially making the bank better able to withstand economic trouble. However, banks that are losing money have less ability to do those things.

First State Bank of Ben Wheeler, Texas beat the national average on Bankrate's test of earnings, achieving a score of 22 out of a possible 30.

One key measure of a bank's earnings is return on equity, or net income (profit, essentially) divided by the total amount of equity. First State Bank of Ben Wheeler, Texas's most recent annualized quarterly return on equity was 12.51 percent, above the national average of 8.10 percent.

The bank recorded net income of $2.2 million on total equity of $18.3 million for the twelve months ended December 31, 2017. The bank had an annualized return on average assets, or ROA, of 1.58 percent, above the 1 percent deemed satisfactory in accordance with industry standards, and above 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.