Safe and Sound

The First National Bank of Williamson

Williamson, WV
5
Star Rating
The First National Bank of Williamson is a Williamson, WV-based, FDIC-insured bank started in 1903. The bank has equity of $11.0 million on $80.8 million in assets, according to December 31, 2017, regulatory filings.

With 33 full-time employees in 3 offices in multiple states, the bank currently holds loans and leases worth $48.9 million, including real estate loans of $40.2 million. U.S. bank customers currently have $67.6 million in deposits with the bank.

Overall, Bankrate believes that, as of December 31, 2017, The First National Bank of Williamson exhibited a superior condition, earning a full 5 stars for safety and soundness. Keep reading for an analysis of how the bank fared on the three major criteria Bankrate used to score U.S. banks on safety and soundness.

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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 when a bank is experiencing economic trouble. Therefore, when it comes to measuring an an institution's financial stability, capital is essential. When looking at safety and soundness, more capital is preferred.

The First National Bank of Williamson achieved a score of 18 out of a possible 30 points on our test to measure capital adequacy, exceeding the national average of 13.13.

A bank's Tier 1 capital ratio is a widely followed measure of this buffer. The First National Bank of Williamson's Tier 1 capital ratio was 26.28 percent, above the 6 percent level considered adequate by regulators, and above the national average of 25.65 percent. A higher capital ratio means the bank will be better able to stand up to financial headwinds.

Overall, The First National Bank of Williamson held equity amounting to 13.58 percent of its assets, which exceeded the national average of 12.03 percent.

Asset Quality Score

Bankrate uses this test to determine the impact of problem assets, such as unpaid loans, on the bank's capitalization and allocated loan loss reserves.

A bank with extensive holdings of these types of assets may eventually have to use capital to absorb losses, shrinking its equity cushion. It also means that there are likely to be many assets that are in non-accrual status and thus aren't earning money, resulting in lower earnings and potentially more risk of a failure in the future.

The First National Bank of Williamson scored 36 out of a possible 40 points on Bankrate's asset quality test, below the national average of 37.49.

The percentage of problem assets a bank holds compared to its total assets is a widely used indicator of asset quality.As of December 31, 2017, 1.35 percent of The First National Bank of Williamson'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 maintain a reserve known as an "allowance for loan and lease losses" to deal with problem assets . Comparing the reserve's size to the total amount of problem loans can be a handy indicator when evaluating a bank's ability to manage problem assets. Unfortunately, the FDIC did not provide information on The First National Bank of Williamson's loan loss allowance in its most recent filings.

Earnings score

How profitable a bank is affects its long-term survivability. 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 financial trouble. Conversely, losses diminish a bank's ability to do those things.

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

Return on equity, calculated by dividing net income (profit, essentially) by the total amount of equity, is one important way to measure a bank's earnings. The First National Bank of Williamson's most recent annualized quarterly return on equity was 9.21 percent, above the national average of 8.10 percent.

The bank reported net income of $1.1 million on total equity of $11.0 million for the twelve months ended December 31, 2017. The bank reported an annualized return on average assets, or ROA, of 1.28 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.