Safe and Sound

The First National Bank of McIntosh

Mcintosh, MN
5
Star Rating
Founded in 1889, The First National Bank of McIntosh is an FDIC-insured bank based in Mcintosh, MN. Regulatory filings show the bank having equity of $6.9 million on assets of $28.9 million, as of December 31, 2017.

With 5 full-time employees, the bank has amassed loans and leases worth $10.0 million, including real estate loans of $5.5 million. U.S. bank customers currently have $21.9 million in deposits with the bank.

Overall, Bankrate believes that, as of December 31, 2017, The First National Bank of McIntosh exhibited a superior condition, earning a full 5 stars for safety and soundness. Here's a look at how the bank fared on the three important criteria Bankrate used to grade American banks on safety and soundness.

WHAT IS
SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

Capital acts as a cushion against losses and as protection for account holders during periods of financial trouble for the bank. Therefore, when it comes to measuring an a bank's financial fortitude, capital is useful. When looking at safety and soundness, the more capital, the better.

On our test to measure capital adequacy, The First National Bank of McIntosh achieved a score of 30 out of a possible 30 points, above 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 McIntosh's Tier 1 capital ratio was 63.30 percent, higher than the 6 percent level considered adequate by regulators, and exceeding the national average of 25.65 percent. The higher the capital ratio, the better the bank will be able to weather economic difficulties.

Overall, The First National Bank of McIntosh held equity amounting to 24.07 percent of its assets, which exceeded the national average of 12.03 percent.

Asset Quality Score

This test is intended to try to understand how the bank's reserves set aside to cover loan losses, as well as overall capitalization, could be affected by troubled assets, such as past-due mortgages.

Having extensive holdings of these kinds of assets may eventually force a bank to use capital to absorb losses, reducing 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, pushing down earnings and increasing the chances of a failure in the future.

The First National Bank of McIntosh beat out the national average of 37.49 on Bankrate's asset quality test, racking up 40 out of a possible 40 points .

A useful indicator of asset quality is the percentage of problem assets a bank holds compared to its total assets. As of December 31, 2017, 0.03 percent of The First National Bank of McIntosh'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 to handle problem assets known as an "allowance for loan and lease losses." Comparing how large that reserve is to the total amount of problematic loans can be a handy indicator when evaluating a bank's ability to manage problem assets. The First National Bank of McIntosh's loan loss allowance was 8,633.33 percent of its total noncurrent loans, exceeding the national average. All things being equal, the higher the ratio of loan loss allowance to noncurrent loans, the better.

Earnings score

How profitable a bank is has an effect on its long-term survivability. A bank can retain its earnings, boosting its capital buffer, or put them to work addressing problematic loans, potentially making the bank better prepared to withstand economic shocks. However, banks that are losing money have less ability to do those things.

On Bankrate's test of earnings, The First National Bank of McIntosh scored 8 out of a possible 30, coming in below the national average of 15.12.

One widely used way to measure a bank's earnings is return on equity, or net income (profit, essentially) divided by total equity. The First National Bank of McIntosh's most recent annualized quarterly return on equity was 3.94 percent, below the national average of 8.10 percent.

The bank earned net income of $269,000 on total equity of $6.9 million for the twelve months ended December 31, 2017. The bank reported an annualized return on average assets, or ROA, of 0.93 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.