Safe and Sound

The First National Bank of McGregor

Mc Gregor, TX
4
Star Rating
The First National Bank of McGregor is an FDIC-insured bank founded in 1889 and currently headquartered in Mc Gregor, TX. Regulatory filings show the bank having equity of $25.5 million on assets of $321.1 million, as of December 31, 2017.

U.S. bank customers have $294.7 million on deposit at 3 offices in TX run by 57 full-time employees. With that footprint, the bank has amassed loans and leases worth $288.7 million, $226.6 million of which are for real estate.

Overall, Bankrate believes that, as of December 31, 2017, The First National Bank of McGregor 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 important criteria Bankrate used to evaluate U.S. banks.

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THE INSTITUTION'S SCORE

Capital Score

Capital is an essential measurement of an institution's financial fortitude. It acts as a buffer against losses and affords protection for accountholders when a bank is experiencing economic trouble. When it comes to safety and soundness, the more capital, the better.

The First National Bank of McGregor came in below the national average of 13.13 on our test to measure the adequacy of a bank's capital, receiving a score of 6 out of a possible 30 points.

A bank's Tier 1 capital ratio is a widely used measure of this buffer. The First National Bank of McGregor's Tier 1 capital ratio was 9.56 percent, higher than the 6 percent level considered adequate by regulators, but under the national average of 25.65 percent. The higher the capital ratio, the better the bank will be able to weather financial challenges.

Overall, The First National Bank of McGregor held equity amounting to 7.94 percent of its assets, which was lower than the national average of 12.03 percent.

Asset Quality Score

This test is intended to estimate how the bank's loan loss reserves and overall capitalization could be affected by problem assets, such as past-due loans.

Having lots of these types of assets suggests a bank could eventually have to use capital to cover losses, cutting down on 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, reducing earnings and elevating the chances of a failure in the future.

The First National Bank of McGregor beat out the national average of 37.49 on Bankrate's asset quality test, racking up 40 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, 0.21 percent of The First National Bank of McGregor'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 maintain a reserve to handle problem assets known as an "allowance for loan and lease losses." That reserve's size can be a handy indicator when evaluating a bank's ability to manage problem assets, especially when compared to the total amount of problem loans. Unfortunately, the FDIC did not provide information on The First National Bank of McGregor's loan loss allowance in its most recent filings.

Earnings score

A bank's earnings performance affects its safety and soundness. A bank can retain its earnings, giving a boost to its capital cushion, or use them to address problematic loans, likely making the bank better able to withstand economic shocks. Conversely, losses diminish a bank's ability to do those things.

The First National Bank of McGregor scored 20 out of a possible 30 on Bankrate's earnings test, exceeding 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 most recent annualized quarterly return on equity for The First National Bank of McGregor was 12.64 percent, above the national average of 8.10 percent.

The bank recorded net income of $3.0 million on total equity of $25.5 million for the twelve months ended December 31, 2017. The bank reported an annualized return on average assets, or ROA, of 1.07 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.