Safe and Sound

The First Bank and Trust Company of Murphysboro

Murphysboro, IL
2
Star Rating
Started in 1889, The First Bank and Trust Company of Murphysboro is an FDIC-insured bank headquartered in Murphysboro, IL. The bank has equity of $6.4 million on $76.8 million in assets, according to December 31, 2017, regulatory filings.

Thanks to the efforts of 28 full-time employees in 2 offices in IL, the bank has amassed loans and leases worth $50.3 million, $37.8 million of which are for real estate. The bank currently holds $66.3 million in deposits from U.S. customers.

Overall, Bankrate believes that, as of December 31, 2017, The First Bank and Trust Company of Murphysboro exhibited a below-average condition, earning 2 out of 5 stars for safety and soundness. Keep reading for a breakdown of how the bank did on the three important criteria Bankrate used to score U.S. 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 important. It works as a bulwark against losses and as protection for accountholders when a bank is experiencing financial instability. When looking at safety and soundness, more capital is preferred.

On our test to measure capital adequacy, The First Bank and Trust Company of Murphysboro received a score of 8 out of a possible 30 points, coming in below the national average of 13.13.

A bank's Tier 1 capital ratio is an important measure of this buffer. The First Bank and Trust Company of Murphysboro's Tier 1 capital ratio was 14.29 percent, higher than the 6 percent level considered adequate by regulators, but under the national average of 25.65 percent. A higher capital ratio means the bank will be better able to weather economic headwinds.

Overall, The First Bank and Trust Company of Murphysboro held equity amounting to 8.37 percent of its assets, which was lower than the national average of 12.03 percent.

Asset Quality Score

This test's purpose is to estimate how the bank's loan loss reserves and overall capitalization could be affected by problem assets, such as unpaid loans.

Having large numbers of these types of assets suggests a bank could have to use capital to absorb losses, reducing its equity cushion. Many of those assets are also likely to be in non-accrual status and thus aren't earning money, resulting in diminished earnings and potentially more risk of a future failure.

The First Bank and Trust Company of Murphysboro scored 28 out of a possible 40 points on Bankrate's test of asset quality, coming in below the national average of 37.49.

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, 2.18 percent of The First Bank and Trust Company of Murphysboro'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 known as an "allowance for loan and lease losses" to deal with troubled assets . 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 The First Bank and Trust Company of Murphysboro's loan loss allowance in its most recent filings.

Earnings score

A bank's earnings performance has an effect on its long-term survivability. Earnings can be retained by the bank, boosting its capital buffer, or be used to address problematic loans, potentially making the bank more resilient in times of trouble. Banks that are losing money, however, are less able to do those things.

On Bankrate's earnings test, The First Bank and Trust Company of Murphysboro scored 6 out of a possible 30, less than the national average of 15.12.

One important way to measure a bank's earnings is return on equity, calculated by dividing net income (essentially profit) by total equity. The First Bank and Trust Company of Murphysboro's most recent annualized quarterly return on equity was 2.94 percent, below the national average of 8.10 percent.

The bank reported net income of $190,000 on total equity of $6.4 million for the twelve months ended December 31, 2017. The bank reported an annualized return on average assets, or ROA, of 0.25 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.