Safe and Sound

American Bank & Trust Company, Inc.

Bowling Green, KY
4
Star Rating
American Bank & Trust Company, Inc. is a Bowling Green, KY-based, FDIC-insured bank started in 2000. The bank has equity of $28.8 million on assets of $302.0 million, according to June 30, 2017, regulatory filings.

Thanks to the work of 74 full-time employees in 5 offices in KY, the bank has amassed loans and leases worth $239.9 million, including real estate loans of $222.0 million. The bank currently holds $272.0 million in deposits from U.S. customers.

Overall, Bankrate believes that, as of June 30, 2017, American Bank & Trust Company, Inc. exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Keep reading for an analysis of how the bank faired on the three important criteria Bankrate used to grade American banks.

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 depositors during periods of economic instability for the bank. It follows then that a bank's level of capital is a key measurement of an institution's financial strength. When it comes to safety and soundness, the more capital, the better.
American Bank & Trust Company, Inc. fell short of the national average of 13.38 on our test to measure capital adequacy, racking up 10 out of a possible 30 points.

One commonly used measure of this buffer is a bank's Tier 1 capital ratio. American Bank & Trust Company, Inc.'s Tier 1 capital ratio was 11.76 percent, above the 6 percent level considered adequate by regulators, but below the national average of 25.16 percent. A higher capital ratio suggests the bank will be better able to weather economic downturns.

Overall, American Bank & Trust Company, Inc. held equity amounting to 9.55 percent of its assets, which was lower than the national average of 12.10 percent.

Asset Quality Score

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

A bank with lots of these kinds of assets could eventually have to use capital to absorb losses, shrinking its cushion of equity. It also means that there are likely to be many assets that are in non-accrual status and thus aren't earning money, reducing earnings and increasing the risk of a future failure.

On Bankrate's asset quality test, American Bank & Trust Company, Inc. scored 40 out of a possible 40 points, above the national average of 37.62 points.

A helpful indicator of asset quality is the percentage of problem assets a bank holds compared to its total assets. As of June 30, 2017, 0.43 percent of American Bank & Trust Company, Inc.'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 1.04 percent.

Banks maintain a reserve to handle troubled assets known as an "allowance for loan and lease losses." Comparing the that 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 American Bank & Trust Company, Inc.'s loan loss allowance in its most recent filings.

Earnings score

A bank's earnings performance has an effect on its long-term survivability. A bank can retain its earnings, giving a boost to its capital cushion, or put them to work addressing problematic loans, likely making the bank more resilient in times of trouble. Banks that are losing money, however, have less ability to do those things.

On Bankrate's earnings test, American Bank & Trust Company, Inc. scored 18 out of a possible 30, beating out the national average of 16.52.

One important measure of a bank's earnings is return on equity, calculated by dividing net income (profit, essentially) by the total amount of equity. The most recent annualized quarterly return on equity for American Bank & Trust Company, Inc. was 8.47 percent, below the national average of 9.28 percent.

For the twelve months ended June 30, 2017, the bank recorded net income of $1.2 million on total equity of $28.8 million. The bank experienced an annualized return on average assets, or ROA, of 0.82 percent, below the 1 percent deemed satisfactory in accordance with industry standards and below the average for U.S. banks of 1.14 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.