Safe and Sound

Drummond Community Bank

Chiefland, FL
5
Star Rating
Drummond Community Bank is a Chiefland, FL-based, FDIC-insured bank that opened its doors in 1990. As of June 30, 2017, the bank held equity of $60.6 million on $497,765,000 in assets.

Thanks to the work of 173 full-time employees in 15 offices in FL, the bank currently holds loans and leases worth $261.9 million, $226.4 million of which are for real estate. The bank currently holds $422.4 million in deposits from U.S. customers.

Overall, Bankrate believes that, as of June 30, 2017, Drummond Community Bank exhibited a superior condition, earning a full 5 stars for safety and soundness. Here's a breakdown of how the bank faired on the three key criteria Bankrate used to evaluate American banks on safety and soundness.

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THE INSTITUTION'S SCORE

Capital Score

Capital works as a bulwark against losses and affords protection for depositors when a bank is struggling financially. Therefore, a bank's level of capital is an important measurement of a bank's financial resilience. When it comes to safety and soundness, the more capital, the better.
Drummond Community Bank beat out the national average of 13.38 points on our test to measure the adequacy of a bank's capital, achieving a score of 14 out of a possible 30 points.

One important measure of this buffer is a bank's Tier 1 capital ratio. Drummond Community Bank's Tier 1 capital ratio was 19.28 percent, above the 6 percent level regulators consider adequate, but under the national average of 25.16 percent. The higher the capital ratio, the better the bank will be able to stand up to economic difficulties.

Overall, Drummond Community Bank held equity amounting to 12.18 percent of its assets, which exceeded the national average of 12.10 percent.

Asset Quality Score

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

Having a large number of these kinds of assets may eventually force a bank to use capital to absorb losses, cutting down on its cushion of equity. Many of those assets are also likely to be in non-accrual status and thus aren't earning interest for the bank, decreasing earnings and elevating the chances of a failure in the future.

Drummond Community Bank scored 40 out of a possible 40 points on Bankrate's asset quality test, beating out the national average of 37.62.

The percentage of problem assets a bank holds compared to its total assets is a helpful indicator of asset quality.As of June 30, 2017, 1.24 percent of Drummond Community 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 1.04 percent.

Banks maintain 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 Drummond Community Bank's loan loss allowance in its most recent filings.

Earnings score

A bank's profitability affects its long-term survivability. A bank can retain its earnings, expanding its capital cushion, or put them to work addressing problematic loans, likely making the bank better prepared to withstand financial trouble. However, banks that are losing money are less able to do those things.

Drummond Community Bank scored 20 out of a possible 30 on Bankrate's test of earnings, above the national average of 16.52.

Return on equity, calculated by dividing net income (essentially, profit) by the total amount of equity, is one important way to measure a bank's earnings. The most recent annualized quarterly return on equity for Drummond Community Bank was 12.08 percent, above the national average of 9.28 percent.

The bank reported net income of $3.4 million on total equity of $60.6 million for the twelve months ended June 30, 2017. The bank had an annualized return on average assets, or ROA, of 1.42 percent, above the 1 percent deemed satisfactory in accordance with industry standards, and above 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.