Safe and Sound

The First State Bank

Barboursville, WV
NR
Star Rating
The First State Bank is a Barboursville, WV-based, FDIC-insured bank dating back to 1905. The bank has equity of $11.3 million on $181.9 million in assets, according to December 31, 2017, regulatory filings.

With 87 full-time employees in 4 offices in WV, the bank has amassed loans and leases worth $127.0 million, including real estate loans of $100.6 million. U.S. bank customers currently have $149.5 million in deposits with the bank.

Overall, Bankrate did not have enough information on this institution to give it a star rating. Keep reading for an analysis of how the bank fared on the three major criteria Bankrate used to score U.S. banks.

WHAT IS
SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

When it comes to measuring an a bank's financial stability, capital is essential. It acts as a cushion against losses and provides protection for depositors when a bank is experiencing financial instability. When looking at safety and soundness, more capital is preferred.

The First State Bank fell short of the national average of 13.13 on our test to measure capital adequacy, scoring 0 out of a possible 30 points.

One way to measure this buffer is looking at a bank's Tier 1 capital ratio. The First State Bank's Tier 1 capital ratio was 6.82 percent, above 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 economic headwinds.

Overall, The First State Bank held equity amounting to 6.20 percent of its assets, which was lower than the national average of 12.03 percent.

Asset Quality Score

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

Having lots of these types of assets means a bank could eventually have to use capital to absorb losses, cutting down on its equity buffer. It also means that there are likely to be many assets that are in non-accrual status and no longer earning money, decreasing earnings and elevating the chances of a failure in the future.

The First State Bank finished below the national average of 37.49 on Bankrate's asset quality test, racking up 0 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, 13.19 percent of The First State Bank'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 to deal with troubled assets known as an "allowance for loan and lease losses." That reserve's size can be a helpful 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 State Bank's loan loss allowance in its most recent filings.

Earnings score

How profitable a bank is has an effect on its long-term survivability. Earnings can be retained by the bank, expanding its capital buffer, or be used to deal with problematic loans, likely making the bank better prepared to withstand economic shocks. Losses, on the other hand, reduce a bank's ability to do those things.

The First State Bank scored 0 out of a possible 30 on Bankrate's earnings test, falling short of 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 measure of a bank's earnings. The most recent annualized quarterly return on equity for The First State Bank was -15.37 percent, below the national average of 8.10 percent.

The bank recorded net income of $-1.9 million on total equity of $11.3 million for the twelve months ended December 31, 2017. The bank experienced an annualized return on average assets, or ROA, of -0.96 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.