Safe and Sound

The First National Bank in Tremont

Tremont, IL
4
Star Rating
Started in 1931, The First National Bank in Tremont is an FDIC-insured bank headquartered in Tremont, IL. As of December 31, 2017, the bank held equity of $13.8 million on assets of $121.1 million.

With 33 full-time employees in 3 offices in IL, the bank currently holds loans and leases worth $71.3 million, including real estate loans of $53.5 million. U.S. bank customers currently have $106.5 million in deposits with the bank.

Overall, Bankrate believes that, as of December 31, 2017, The First National Bank in Tremont exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Keep reading for a breakdown of how the bank fared on the three key criteria Bankrate used to score U.S. banks.

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THE INSTITUTION'S SCORE

Capital Score

Capital works as a bulwark against losses and provides protection for depositors during periods of economic trouble for the bank. Therefore, when it comes to measuring an a bank's financial strength, capital is useful. When it comes to safety and soundness, the higher the capital, the better.

The First National Bank in Tremont scored below the national average of 13.13 on our test to measure capital adequacy, racking up 12 out of a possible 30 points.

One important measure of this buffer is a bank's Tier 1 capital ratio. The First National Bank in Tremont's Tier 1 capital ratio was 18.31 percent, above the 6 percent level considered adequate by regulators, but less than the national average of 25.65 percent. The higher the capital ratio, the better the bank will be able to weather economic challenges.

Overall, The First National Bank in Tremont held equity amounting to 11.41 percent of its assets, which was lower than the national average of 12.03 percent.

Asset Quality Score

In this test, Bankrate tries to determine the impact of problem assets, such as past-due loans, on the bank's reserves set aside to cover loan losses, as well as overall capitalization.

A bank with extensive holdings of these types of assets could eventually have to use capital to cover losses, shrinking its equity buffer. Many of those assets are also likely to be in non-accrual status and no longer earning interest for the bank, reducing earnings and increasing the chances of a failure in the future.

On Bankrate's test of asset quality, The First National Bank in Tremont scored 40 out of a possible 40 points, better than the national average of 37.49 points.

The percentage of problem assets a bank holds compared to its total assets is a useful indicator of asset quality.As of December 31, 2017, 0.66 percent of The First National Bank in Tremont'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 maintain a reserve known as an "allowance for loan and lease losses" to deal with troubled assets . The size of that reserve can be a useful indicator when evaluating a bank's ability to manage troubled assets, especially when compared to the total amount of at-risk loans. Unfortunately, the FDIC did not provide information on The First National Bank in Tremont's loan loss allowance in its most recent filings.

Earnings score

How profitable a bank is has an effect on its safety and soundness. A bank can retain its earnings, increasing its capital cushion, or put them to work addressing problematic loans, potentially making the bank more resilient in tough times. Losses, on the other hand, diminish a bank's ability to do those things.

The First National Bank in Tremont scored 10 out of a possible 30 on Bankrate's test of earnings, failing to reach the national average of 15.12.

Return on equity, calculated by dividing net income (profit, basically) by the total amount of equity, is one important way to measure a bank's earnings. The First National Bank in Tremont's most recent annualized quarterly return on equity was 4.12 percent, below the national average of 8.10 percent.

The bank reported net income of $564,000 on total equity of $13.8 million for the twelve months ended December 31, 2017. The bank experienced an annualized return on average assets, or ROA, of 0.48 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.