Safe and Sound

The First National Bank at St. James

Saint James, MN
3
Star Rating
Saint James, MN-based The First National Bank at St. James is an FDIC-insured bank founded in 1934. As of December 31, 2017, the bank had equity of $2.5 million on assets of $30.6 million.

Thanks to the efforts of 11 full-time employees, the bank has amassed loans and leases worth $21.3 million, $14.1 million of which are for real estate. U.S. bank customers currently have $27.4 million in deposits with the bank.

Overall, Bankrate believes that, as of December 31, 2017, The First National Bank at St. James exhibited a generally satisfactory condition, earning 3 out of 5 stars for safety and soundness. Keep reading for a look at how the bank did on the three key criteria Bankrate used to score American banks.

WHAT IS
SAFE AND SOUND?

Find out

THE INSTITUTION'S SCORE

Capital Score

Capital acts as a cushion against losses and provides protection for account holders when a bank is struggling financially. Therefore, a bank's level of capital is a useful measurement of a bank's financial strength. When looking at safety and soundness, more capital is preferred.

On our test to measure the adequacy of a bank's capital, The First National Bank at St. James received a score of 8 out of a possible 30 points, less than the national average of 13.13.

One widely followed measure of this buffer is a bank's Tier 1 capital ratio. The First National Bank at St. James's Tier 1 capital ratio was 11.31 percent, higher than the 6 percent level regulators consider adequate, but lower than 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 National Bank at St. James held equity amounting to 8.10 percent of its assets, which was lower than the national average of 12.03 percent.

Asset Quality Score

In this test, Bankrate tries to estimate the effect of troubled assets, such as past-due mortgages, on the bank's capitalization and allocated loan loss reserves.

A bank with extensive holdings of these kinds of assets could eventually be required to use capital to cover losses, decreasing its cushion of equity. It also means that there are likely to be many assets that are in non-accrual status and no longer earning money, resulting in depressed earnings and potentially more risk of a future failure.

The First National Bank at St. James fell short of the national average of 37.49 on Bankrate's asset quality test, racking up 36 out of a possible 40 points .

A helpful indicator of asset quality is the percentage of problem assets a bank holds compared to its total assets. As of December 31, 2017, 1.44 percent of The First National Bank at St. James's loans were noncurrent, meaning 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." That reserve's size can be a useful indicator when evaluating a bank's ability to manage troubled assets, especially when compared to the total amount of problematic loans. Unfortunately, the FDIC did not provide information on The First National Bank at St. James's loan loss allowance in its most recent filings.

Earnings score

A bank's ability to earn money affects its safety and soundness. Earnings can be retained by the bank, boosting its capital buffer, or be used to address problematic loans, likely making the bank more resilient in times of trouble. Banks that are losing money, however, are less able to do those things.

The First National Bank at St. James did below-average on Bankrate's earnings test, achieving a score of 6 out of a possible 30.

One important way to measure a bank's earnings is return on equity, or net income (essentially profit) divided by total equity. The First National Bank at St. James's most recent annualized quarterly return on equity was 2.87 percent, below the national average of 8.10 percent.

The bank reported net income of $72,000 on total equity of $2.5 million for the twelve months ended December 31, 2017. The bank had an annualized return on average assets, or ROA, of 0.23 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.