Safe and Sound

First State Bank of Brownsboro

Brownsboro, TX
4
Star Rating
Brownsboro, TX-based First State Bank of Brownsboro is an FDIC-insured bank started in 1917. Regulatory filings show the bank having equity of $9.9 million on $102.8 million in assets, as of December 31, 2017.

U.S. bank customers have $92.8 million on deposit at 3 offices in TX run by 24 full-time employees. With that footprint, the bank has amassed loans and leases worth $55.5 million, including real estate loans of $37.0 million.

Overall, Bankrate believes that, as of December 31, 2017, First State Bank of Brownsboro exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Keep reading for an analysis of how the bank fared on the three important criteria Bankrate used to score U.S. banks.

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THE INSTITUTION'S SCORE

Capital Score

Capital is a useful measurement of an institution's financial strength. It works as a bulwark against losses and provides protection for accountholders when a bank is struggling financially. When it comes to safety and soundness, more capital is preferred.

First State Bank of Brownsboro came in below the national average of 13.13 on our test to measure capital adequacy, racking up 10 out of a possible 30 points.

One way to measure this buffer is looking at a bank's Tier 1 capital ratio. First State Bank of Brownsboro's Tier 1 capital ratio was 17.06 percent, higher than the 6 percent level regulators consider adequate, but under the national average of 25.65 percent. A higher capital ratio suggests the bank will be better able to weather financial challenges.

Overall, First State Bank of Brownsboro held equity amounting to 9.65 percent of its assets, which was lower than the national average of 12.03 percent.

Asset Quality Score

In this test, Bankrate tries to determine the effect of troubled assets, such as unpaid loans, on the bank's capitalization and allocated loan loss reserves.

A bank with a large number of these types of assets could eventually be forced to use capital to cover losses, diminishing its equity cushion. Many of those assets are also likely to be in non-accrual status and thus aren't earning interest for the bank, pushing down earnings and elevating the chances of a future failure.

First State Bank of Brownsboro 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, 1.01 percent of First State Bank of Brownsboro's loans were noncurrent -- in other words, they were more than 90 days past due or were in non-accrual status. That's exactly equal to the national average.

Banks keep a reserve known as an "allowance for loan and lease losses" to deal with problem assets . Comparing how large that reserve is to the total amount of problematic loans can be a handy indicator when evaluating a bank's ability to manage problem assets. Unfortunately, the FDIC did not provide information on First State Bank of Brownsboro's loan loss allowance in its most recent filings.

Earnings score

How profitable a bank is has an effect on its long-term survivability. A bank can retain its earnings, boosting its capital buffer, or put them to work addressing problematic loans, likely making the bank better able to withstand financial shocks. Obviously, banks that are losing money are less able to do those things.

First State Bank of Brownsboro scored 18 out of a possible 30 on Bankrate's test of earnings, beating the national average of 15.12.

Return on equity, calculated by dividing net income (essentially, profit) by total equity, is one important way to measure a bank's earnings. The most recent annualized quarterly return on equity for First State Bank of Brownsboro was 9.65 percent, above the national average of 8.10 percent.

For the twelve months ended December 31, 2017, the bank reported net income of $952,000 on total equity of $9.9 million. The bank experienced an annualized return on average assets, or ROA, of 0.94 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.