Safe and Sound

The First National Bank of Eldorado

Eldorado, TX
5
Star Rating
The First National Bank of Eldorado is an FDIC-insured bank founded in 1907 and currently based in Eldorado, TX. As of December 31, 2017, the bank held equity of $8.4 million on $59.3 million in assets.

Thanks to the efforts of 14 full-time employees, the bank has amassed loans and leases worth $28.2 million, $13.4 million of which are for real estate. U.S. bank customers currently have $50.5 million in deposits with the bank.

Overall, Bankrate believes that, as of December 31, 2017, The First National Bank of Eldorado exhibited a superior condition, earning a full 5 stars for safety and soundness. Here's an analysis of how the bank did on the three key criteria Bankrate used to score U.S. banks on safety and soundness.

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 stability, capital is essential. It works as a bulwark against losses and affords protection for depositors when a bank is struggling financially. When it comes to safety and soundness, the more capital, the better.

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

One widely used measure of this buffer is a bank's Tier 1 capital ratio. The First National Bank of Eldorado's Tier 1 capital ratio was 24.43 percent, above the 6 percent level regulators consider adequate, but lower than the national average of 25.65 percent. The higher the capital ratio, the better the bank will be able to weather financial headwinds.

Overall, The First National Bank of Eldorado held equity amounting to 14.24 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 capitalization and allocated loan loss reserves could be affected by problem assets, such as past-due mortgages.

Having extensive holdings of these kinds of assets suggests a bank could have to use capital to cover losses, diminishing 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, pushing down earnings and elevating the risk of a failure in the future.

The First National Bank of Eldorado scored 40 out of a possible 40 points on Bankrate's test of asset quality, above the national average of 37.49.

A handy indicator of asset quality is the percentage of problem assets a bank holds compared to its total assets. As of December 31, 2017, 0.12 percent of The First National Bank of Eldorado'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 . Comparing the size of that reserve to the total amount of problem loans can be a useful indicator when evaluating a bank's ability to manage troubled assets. The First National Bank of Eldorado's loan loss allowance was 2,041.18 percent of its total noncurrent loans, higher than the national average. All things being equal, a higher ratio of loan loss allowance to noncurrent loans is better.

Earnings score

How profitable a bank is affects its long-term survivability. A bank can retain its earnings, increasing its capital cushion, or use them to address problematic loans, likely making the bank more resilient in times of trouble. Conversely, losses take away from a bank's ability to do those things.

The First National Bank of Eldorado exceeded the national average on Bankrate's test of earnings, achieving a score of 24 out of a possible 30.

One key measure of a bank's earnings is return on equity, calculated by dividing net income (essentially profit) by the total amount of equity. The most recent annualized quarterly return on equity for The First National Bank of Eldorado was 14.95 percent, above the national average of 8.10 percent.

The bank recorded net income of $1.2 million on total equity of $8.4 million for the twelve months ended December 31, 2017. The bank reported an annualized return on average assets, or ROA, of 2.02 percent, above the 1 percent deemed satisfactory in accordance with industry standards, and above 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.