Safe and Sound

The Liberty National Bank in Paris

Paris, TX
5
Star Rating
The Liberty National Bank in Paris is an FDIC-insured bank started in 1931 and currently headquartered in Paris, TX. The bank has equity of $45.0 million on $285.7 million in assets, according to December 31, 2017, regulatory filings.

With 50 full-time employees in 3 offices in TX, the bank holds loans and leases worth $127.0 million, including real estate loans of $96.1 million. U.S. bank customers currently have $240.5 million in deposits with the bank.

Overall, Bankrate believes that, as of December 31, 2017, The Liberty National Bank in Paris exhibited a superior condition, earning a full 5 stars for safety and soundness. Here's a breakdown of how the bank did on the three important criteria Bankrate used to evaluate American banks on safety and soundness.

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THE INSTITUTION'S SCORE

Capital Score

Capital is an essential measurement of an institution's financial fortitude. It works as a cushion against losses and provides protection for depositors during periods of financial trouble for the bank. When it comes to safety and soundness, the more capital, the better.

The Liberty National Bank in Paris exceeded the national average of 13.13 points on our test to measure capital adequacy, achieving a score of 22 out of a possible 30 points.

A bank's Tier 1 capital ratio is an important measure of this buffer. The Liberty National Bank in Paris's Tier 1 capital ratio was 33.33 percent, above the 6 percent level regulators consider adequate, and above the national average of 25.65 percent. A higher capital ratio suggests the bank will be better able to stand up to economic headwinds.

Overall, The Liberty National Bank in Paris held equity amounting to 15.77 percent of its assets, which exceeded the national average of 12.03 percent.

Asset Quality Score

In this test, Bankrate tries to determine the impact of troubled assets, such as past-due mortgages, on the bank's capitalization and allocated loan loss reserves.

A bank with large numbers of these types of assets could eventually be forced to use capital to cover losses, cutting down on its equity buffer. Many of those assets are also likely to be in non-accrual status and no longer earning money, resulting in reduced earnings and potentially more risk of a failure in the future.

The Liberty National Bank in Paris scored above the national average of 37.49 on Bankrate's test of asset quality, 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, 0.27 percent of The Liberty National Bank in Paris'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 keep a reserve known as an "allowance for loan and lease losses" to deal with troubled assets . That reserve's size can be a widely used indicator when evaluating a bank's ability to manage problem assets, especially when compared to the total amount of at-risk loans. Unfortunately, the FDIC did not provide information on The Liberty National Bank in Paris's loan loss allowance in its most recent filings.

Earnings score

A bank's ability to earn money affects its safety and soundness. A bank can retain its earnings, expanding its capital buffer, or put them to work addressing problematic loans, likely making the bank better able to withstand financial trouble. Losses, on the other hand, reduce a bank's ability to do those things.

On Bankrate's earnings test, The Liberty National Bank in Paris scored 12 out of a possible 30, failing to reach the national average of 15.12.

One key measure of a bank's earnings is return on equity, calculated by dividing net income (essentially profit) by total equity. The most recent annualized quarterly return on equity for The Liberty National Bank in Paris was 5.65 percent, below the national average of 8.10 percent.

For the twelve months ended December 31, 2017, the bank earned net income of $2.6 million on total equity of $45.0 million. 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.