Safe and Sound

Foothills Bank & Trust

Maryville, TN
4
Star Rating
Started in 2007, Foothills Bank & Trust is an FDIC-insured bank based in Maryville, TN. As of December 31, 2017, the bank had equity of $20.7 million on assets of $209.0 million.

U.S. bank customers have $182.6 million on deposit at 3 offices in TN run by 32 full-time employees. With that footprint, the bank holds loans and leases worth $145.4 million, $133.6 million of which are for real estate.

Overall, Bankrate believes that, as of December 31, 2017, Foothills Bank & Trust exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Keep reading for a look at how the bank did on the three major criteria Bankrate used to score American banks.

WHAT IS
SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

When it comes to measuring an a bank's financial fortitude, capital is essential. It works as a buffer against losses and affords protection for depositors when a bank is experiencing economic instability. When looking at safety and soundness, the higher the capital, the better.

Foothills Bank & Trust received a score of 10 out of a possible 30 points on our test to measure capital adequacy, below the national average of 13.13.

A bank's Tier 1 capital ratio is a widely followed measure of this buffer. Foothills Bank & Trust's Tier 1 capital ratio was 14.06 percent, higher than the 6 percent level regulators consider adequate, but under the national average of 25.65 percent. A higher capital ratio means the bank will be better able to weather financial downturns.

Overall, Foothills Bank & Trust held equity amounting to 9.88 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 troubled assets, such as unpaid loans.

Having a large number of these types of assets means a bank may have to use capital to cover losses, shrinking its cushion of equity. It also means that there are likely to be many assets that are in non-accrual status and thus aren't earning interest for the bank, reducing earnings and elevating the risk of a future failure.

On Bankrate's test of asset quality, Foothills Bank & Trust scored 40 out of a possible 40 points, beating the national average of 37.49 points.

The percentage of problem assets a bank holds compared to its total assets is a handy indicator of asset quality.As of December 31, 2017, none of Foothills Bank & Trust's loans were noncurrent, meaning 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 keep a reserve known as an "allowance for loan and lease losses" to deal with problem assets . Comparing the size of that reserve to the total amount of at-risk loans can be a useful indicator when evaluating a bank's ability to manage problem assets. Unfortunately, the FDIC did not provide information on Foothills Bank & Trust's loan loss allowance in its most recent filings.

Earnings score

A bank's earnings performance affects its safety and soundness. Earnings can be retained by the bank, boosting its capital buffer, or be used to deal with problematic loans, potentially making the bank more resilient in tough times. Losses, on the other hand, lessen a bank's ability to do those things.

Foothills Bank & Trust beat the national average on Bankrate's earnings test, achieving a score of 16 out of a possible 30.

One widely used measure of a bank's earnings is return on equity, calculated by dividing net income (essentially profit) by the total amount of equity. Foothills Bank & Trust's most recent annualized quarterly return on equity was 7.34 percent, below the national average of 8.10 percent.

The bank reported net income of $1.5 million on total equity of $20.7 million for the twelve months ended December 31, 2017. The bank had an annualized return on average assets, or ROA, of 0.72 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.