Safe and Sound

The First National Bank of Brundidge

Brundidge, AL
4
Star Rating
Brundidge, AL-based The First National Bank of Brundidge is an FDIC-insured bank started in 1904. The bank has equity of $13.6 million on $94.5 million in assets, according to December 31, 2017, regulatory filings.

U.S. bank customers have $76.6 million on deposit at 2 offices in AL run by 23 full-time employees. With that footprint, the bank currently holds loans and leases worth $51.3 million, $33.3 million of which are for real estate.

Overall, Bankrate believes that, as of December 31, 2017, The First National Bank of Brundidge 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 major criteria Bankrate used to evaluate American banks.

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THE INSTITUTION'S SCORE

Capital Score

Capital works as a cushion against losses and provides protection for account holders during periods of economic instability for the bank. Therefore, when it comes to measuring an a bank's financial fortitude, capital is essential. From a safety and soundness perspective, the higher the capital, the better.

The First National Bank of Brundidge scored 20 out of a possible 30 points on our test to measure the adequacy of a bank's capital, above the national average of 13.13.

One commonly used measure of this buffer is a bank's Tier 1 capital ratio. The First National Bank of Brundidge's Tier 1 capital ratio was 24.45 percent, exceeding the 6 percent level regulators consider adequate, but below the national average of 25.65 percent. The higher the capital ratio, the better the bank will be able to stand up to economic challenges.

Overall, The First National Bank of Brundidge held equity amounting to 14.36 percent of its assets, which exceeded 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 reserves set aside to cover loan losses, as well as overall capitalization.

Having a large number of these types of assets could eventually require a bank to use capital to cover losses, shrinking its equity buffer. 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, reducing earnings and elevating the chances of a future failure.

On Bankrate's asset quality test, The First National Bank of Brundidge scored 40 out of a possible 40 points, beating out the national average of 37.49 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, 0.99 percent of The First National Bank of Brundidge'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 keep a reserve known as an "allowance for loan and lease losses" to deal with troubled assets . Comparing the size of that reserve to the total amount of problematic loans can be a helpful indicator when evaluating a bank's ability to manage problem assets. Unfortunately, the FDIC did not provide information on The First National Bank of Brundidge's loan loss allowance in its most recent filings.

Earnings score

How profitable a bank is has an effect on its long-term survivability. Earnings may be retained by the bank, increasing its capital buffer, or be used to address problematic loans, potentially making the bank better prepared to withstand financial trouble. Conversely, losses take away from a bank's ability to do those things.

On Bankrate's earnings test, The First National Bank of Brundidge scored 6 out of a possible 30, coming in below the national average of 15.12.

One key measure of a bank's earnings is return on equity, or net income (essentially profit) divided by total equity. The most recent annualized quarterly return on equity for The First National Bank of Brundidge was 2.04 percent, below the national average of 8.10 percent.

The bank recorded net income of $277,000 on total equity of $13.6 million for the twelve months ended December 31, 2017. The bank experienced an annualized return on average assets, or ROA, of 0.30 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.