Safe and Sound

The First National Bank of Hughes Springs

Hughes Springs, TX
4
Star Rating
The First National Bank of Hughes Springs is an FDIC-insured bank started in 1903 and currently headquartered in Hughes Springs, TX. As of December 31, 2017, the bank had equity of $33.5 million on $272.5 million in assets.

U.S. bank customers have $238.9 million on deposit at 17 offices in TX run by 113 full-time employees. With that footprint, the bank currently holds loans and leases worth $185.4 million, including $128.3 million worth of real estate loans.

Overall, Bankrate believes that, as of December 31, 2017, The First National Bank of Hughes Springs exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Keep reading for a look at how the bank did on the three major criteria Bankrate used to score U.S. banks.

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THE INSTITUTION'S SCORE

Capital Score

Capital works as a buffer against losses and as protection for depositors during times of financial trouble for the bank. It follows then that when it comes to measuring an a bank's financial fortitude, capital is essential. When it comes to safety and soundness, the more capital, the better.

On our test to measure the adequacy of a bank's capital, The First National Bank of Hughes Springs achieved a score of 16 out of a possible 30 points, above the national average of 13.13.

One important measure of this buffer is a bank's Tier 1 capital ratio. The First National Bank of Hughes Springs's Tier 1 capital ratio was 16.65 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 financial challenges.

Overall, The First National Bank of Hughes Springs held equity amounting to 12.28 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 troubled assets, such as past-due mortgages, on the bank's loan loss reserves and overall capitalization.

A bank with large numbers of these kinds of assets may eventually be required to use capital to absorb losses, decreasing its buffer of equity. It also means that there are likely to be many assets that are in non-accrual status and thus aren't earning interest for the bank, diminishing earnings and elevating the risk of a future failure.

The First National Bank of Hughes Springs scored 32 out of a possible 40 points on Bankrate's test of asset quality, less than the national average of 37.49.

A widely used indicator of asset quality is the percentage of problem assets a bank holds compared to its total assets. As of December 31, 2017, 2.83 percent of The First National Bank of Hughes Springs'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 known as an "allowance for loan and lease losses" to deal with problem assets . That reserve's size can be a helpful 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 of Hughes Springs's loan loss allowance in its most recent filings.

Earnings score

A bank's ability to earn money affects its long-term survivability. A bank can retain its earnings, expanding its capital buffer, or put them to work addressing problematic loans, potentially making the bank more resilient in tough times. Conversely, losses reduce a bank's ability to do those things.

The First National Bank of Hughes Springs scored 20 out of a possible 30 on Bankrate's test of earnings, better than the national average of 15.12.

Return on equity, calculated by dividing net income (profit, basically) by total equity, is one important measure of a bank's earnings. The most recent annualized quarterly return on equity for The First National Bank of Hughes Springs was 11.32 percent, above the national average of 8.10 percent.

For the twelve months ended December 31, 2017, the bank earned net income of $3.9 million on total equity of $33.5 million. The bank reported an annualized return on average assets, or ROA, of 1.43 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.