Safe and Sound

The First National Bank of Gilmer

Gilmer, TX
4
Star Rating
Gilmer, TX-based The First National Bank of Gilmer is an FDIC-insured bank started in 1900. The bank holds equity of $44.2 million on assets of $353.3 million, according to December 31, 2017, regulatory filings.

Thanks to the work of 108 full-time employees in 10 offices in TX, the bank currently holds loans and leases worth $245.4 million, $172.0 million of which are for real estate. The bank currently holds $298.2 million in deposits from U.S. customers.

Overall, Bankrate believes that, as of December 31, 2017, The First National Bank of Gilmer exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Keep reading for 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 times of economic trouble for the bank. It follows then that when it comes to measuring an an institution's financial strength, capital is useful. From a safety and soundness perspective, the higher the capital, the better.

On our test to measure the adequacy of a bank's capital, The First National Bank of Gilmer scored 14 out of a possible 30 points, beating the national average of 13.13.

One essential measure of this buffer is a bank's Tier 1 capital ratio. The First National Bank of Gilmer's Tier 1 capital ratio was 15.46 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 stand up to financial downturns.

Overall, The First National Bank of Gilmer held equity amounting to 12.51 percent of its assets, which exceeded the national average of 12.03 percent.

Asset Quality Score

Bankrate uses this test to determine the effect of problem assets, such as past-due mortgages, on the bank's loan loss reserves and overall capitalization.

Having large numbers of these kinds of assets means a bank could eventually have to use capital to absorb losses, reducing 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 interest for the bank, pushing down earnings and elevating the risk of a failure in the future.

The First National Bank of Gilmer finished below the national average of 37.49 on Bankrate's asset quality test, racking up 32 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, 2.50 percent of The First National Bank of Gilmer'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 to handle problem assets known as an "allowance for loan and lease losses." The size of that reserve can be a handy indicator when evaluating a bank's ability to manage problem assets, especially when compared to the total amount of problematic loans. Unfortunately, the FDIC did not provide information on The First National Bank of Gilmer's loan loss allowance in its most recent filings.

Earnings score

A bank's earnings performance has an effect on its long-term survivability. A bank can retain its earnings, giving a boost to its capital cushion, or use them to address problematic loans, potentially making the bank better prepared to withstand economic shocks. Losses, on the other hand, diminish a bank's ability to do those things.

The First National Bank of Gilmer scored 18 out of a possible 30 on Bankrate's earnings test, beating out the national average of 15.12.

One widely used way to measure a bank's earnings is return on equity, or net income (profit, basically) divided by the total amount of equity. The most recent annualized quarterly return on equity for The First National Bank of Gilmer was 9.31 percent, above the national average of 8.10 percent.

The bank earned net income of $4.1 million on total equity of $44.2 million for the twelve months ended December 31, 2017. The bank experienced an annualized return on average assets, or ROA, of 1.23 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.