Safe and Sound

Fort Hood National Bank

Fort Hood, TX
4
Star Rating
Fort Hood, TX-based Fort Hood National Bank is an FDIC-insured bank started in 1966. As of December 31, 2017, the bank had equity of $21.6 million on assets of $267.0 million.

Thanks to the work of 66 full-time employees in 9 offices in TX, the bank currently holds loans and leases worth $107.6 million, including $61.6 million worth of real estate loans. The bank currently holds $235.2 million in deposits from U.S. customers.

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

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THE INSTITUTION'S SCORE

Capital Score

Capital works as a buffer against losses and provides protection for account holders when a bank is experiencing financial instability. Therefore, when it comes to measuring an an institution's financial stability, capital is key. From a safety and soundness perspective, the higher the capital, the better.

On our test to measure capital adequacy, Fort Hood National Bank received a score of 8 out of a possible 30 points, lower than the national average of 13.13.

One important measure of this buffer is a bank's Tier 1 capital ratio. Fort Hood National Bank's Tier 1 capital ratio was 39.77 percent, higher than the 6 percent level regulators consider adequate, and exceeding the national average of 25.65 percent. The higher the capital ratio, the better the bank will be able to stand up to financial headwinds.

Overall, Fort Hood National Bank held equity amounting to 8.10 percent of its assets, which was lower than the national average of 12.03 percent.

Asset Quality Score

Bankrate uses this test to determine the impact of problem assets, such as unpaid mortgages, on the bank's loan loss reserves and overall capitalization.

Having large numbers of these kinds of assets suggests a bank could eventually have to use capital to cover losses, cutting down on its equity cushion. It also means that there are likely to be many assets that are in non-accrual status and no longer earning interest for the bank, resulting in lower earnings and potentially more risk of a future failure.

On Bankrate's asset quality test, Fort Hood National Bank scored 40 out of a possible 40 points, exceeding the national average of 37.49 points.

A useful indicator of asset quality is the percentage of problem assets a bank holds compared to its total assets. As of December 31, 2017, 4.83 percent of Fort Hood National 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 deal with problem assets known as an "allowance for loan and lease losses." The size of that reserve can be a widely used indicator when evaluating a bank's ability to manage troubled assets, especially when compared to the total amount of problem loans. Unfortunately, the FDIC did not provide information on Fort Hood National Bank's loan loss allowance in its most recent filings.

Earnings score

A bank's earnings performance has an effect on its safety and soundness. A bank can retain its earnings, increasing its capital buffer, or use them to deal with problematic loans, likely making the bank better able to withstand economic trouble. Conversely, losses reduce a bank's ability to do those things.

Fort Hood National Bank scored 18 out of a possible 30 on Bankrate's test of earnings, exceeding the national average of 15.12.

One widely used way to measure a bank's earnings is return on equity, calculated by dividing net income (essentially profit) by the total amount of equity. The most recent annualized quarterly return on equity for Fort Hood National Bank was 9.89 percent, above the national average of 8.10 percent.

The bank recorded net income of $2.1 million on total equity of $21.6 million for the twelve months ended December 31, 2017. The bank reported an annualized return on average assets, or ROA, of 0.79 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.