Safe and Sound

Citizens Trust Bank

Atlanta, GA
4
Star Rating
Citizens Trust Bank is an Atlanta, GA-based, FDIC-insured bank dating back to 1921. Regulatory filings show the bank having equity of $46.2 million on assets of $407.0 million, as of June 30, 2017.

With 90 full-time employees in 10 offices in multiple states, the bank has amassed loans and leases worth $202.9 million, including real estate loans of $148.5 million. U.S. bank customers currently have $351.0 million in deposits with the bank.

Overall, Bankrate believes that, as of June 30, 2017, Citizens Trust Bank exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Keep reading for a look at how the bank faired on the three important criteria Bankrate used to score U.S. banks.

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THE INSTITUTION'S SCORE

Capital Score

When it comes to measuring an an institution's financial strength, capital is crucial. It acts as a buffer against losses and provides protection for accountholders when a bank is struggling financially. From a safety and soundness perspective, the more capital, the better.
On our test to measure capital adequacy, Citizens Trust Bank racked up 14 out of a possible 30 points, beating out the national average of 13.38.

One way to measure this buffer is looking at a bank's Tier 1 capital ratio. Citizens Trust Bank's Tier 1 capital ratio was 17.62 percent, above the 6 percent level regulators consider adequate, but lower than the national average of 25.16 percent. The higher the capital ratio, the better the bank will be able to weather economic difficulties.

Overall, Citizens Trust Bank held equity amounting to 11.36 percent of its assets, which was lower than the national average of 12.10 percent.

Asset Quality Score

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

Having lots of these types of assets suggests a bank could have to use capital to cover losses, decreasing 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 interest for the bank, diminishing earnings and increasing the risk of a failure in the future.

Citizens Trust Bank fell below the national average of 37.62 on Bankrate's asset quality test, racking up 36 out of a possible 40 points .

A widely used indicator of asset quality is the percentage of problem assets a bank holds compared to its total assets. As of June 30, 2017, 0.97 percent of Citizens Trust Bank's loans were noncurrent -- in other words, 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 keep a reserve known as an "allowance for loan and lease losses" to deal with problem assets . Comparing the the size of that reserve to the total amount of problematic loans can be a handy indicator when evaluating a bank's ability to manage troubled assets. Unfortunately, the FDIC did not provide information on Citizens Trust Bank's loan loss allowance in its most recent filings.

Earnings score

A bank's ability to earn money affects its safety and soundness. Earnings can be retained by the bank, expanding its capital buffer, or be used to address problematic loans, likely making the bank better prepared to withstand economic shocks. Conversely, losses diminish a bank's ability to do those things.

On Bankrate's earnings test, Citizens Trust Bank scored 12 out of a possible 30, failing to reach the national average of 16.52.

Return on equity, calculated by dividing net income (profit, basically) by total equity, is one widely used measure of a bank's earnings. Citizens Trust Bank's most recent annualized quarterly return on equity was 5.86 percent, below the national average of 9.28 percent.

For the twelve months ended June 30, 2017, the bank earned net income of $1.3 million on total equity of $46.2 million. The bank had an annualized return on average assets, or ROA, of 0.67 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.