Safe and Sound

The First, A National Banking Association

Hattiesburg, MS
4
Star Rating
Hattiesburg, MS-based The First, A National Banking Association is an FDIC-insured bank started in 1996. Regulatory filings show the bank having equity of $226.6 million on assets of $1.81 billion, as of December 31, 2017.

U.S. bank customers have $1.49 billion on deposit at 44 offices in multiple states run by 416 full-time employees. With that footprint, the bank has amassed loans and leases worth $1.22 billion, $1.04 billion of which are for real estate.

Overall, Bankrate believes that, as of December 31, 2017, The First, A National Banking Association exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Here's an analysis of how the bank fared on the three key criteria Bankrate used to grade American banks.

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THE INSTITUTION'S SCORE

Capital Score

When it comes to measuring an a bank's financial stability, capital is important. It acts as a buffer against losses and affords protection for depositors when a bank is struggling financially. When it comes to safety and soundness, the higher the capital, the better.

On our test to measure the adequacy of a bank's capital, The First, A National Banking Association scored 14 out of a possible 30 points, beating out the national average of 13.13.

A bank's Tier 1 capital ratio is a widely used measure of this buffer. The First, A National Banking Association's Tier 1 capital ratio was 14.52 percent, higher than the 6 percent level regulators consider adequate, but below the national average of 25.65 percent. A higher capital ratio suggests the bank will be better able to weather financial downturns.

Overall, The First, A National Banking Association held equity amounting to 12.51 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 reserves set aside to cover loan losses, as well as overall capitalization, could be affected by troubled assets, such as unpaid loans.

A bank with a large number of these types of assets may eventually be forced to use capital to absorb losses, shrinking its buffer of equity. Many of those assets are also likely to be in non-accrual status and no longer earning interest for the bank, resulting in reduced earnings and potentially more risk of a failure in the future.

The First, A National Banking Association scored 40 out of a possible 40 points on Bankrate's test of asset quality, beating out the national average of 37.49.

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, 0.48 percent of The First, A National Banking Association'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 . Comparing the reserve's size 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 The First, A National Banking Association's loan loss allowance in its most recent filings.

Earnings score

How profitable a bank is affects its safety and soundness. A bank can retain its earnings, boosting its capital buffer, or put them to work addressing problematic loans, likely making the bank better prepared to withstand economic shocks. Conversely, losses reduce a bank's ability to do those things.

On Bankrate's test of earnings, The First, A National Banking Association scored 12 out of a possible 30, coming in below 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 (profit, essentially) by total equity. The most recent annualized quarterly return on equity for The First, A National Banking Association was 6.51 percent, below the national average of 8.10 percent.

The bank reported net income of $12.6 million on total equity of $226.6 million for the twelve months ended December 31, 2017. The bank experienced an annualized return on average assets, or ROA, of 0.75 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.