Safe and Sound

Arkansas County Bank

De Witt, AR
4
Star Rating
De Witt, AR-based Arkansas County Bank is an FDIC-insured bank founded in 1912. Regulatory filings show the bank having equity of $17.3 million on assets of $169.0 million, as of December 31, 2017.

U.S. bank customers have $133.8 million on deposit at 3 offices in AR run by 47 full-time employees. With that footprint, the bank has amassed loans and leases worth $88.6 million, including real estate loans of $50.4 million.

Overall, Bankrate believes that, as of December 31, 2017, Arkansas County Bank exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Here's a breakdown of how the bank fared on the three major criteria Bankrate used to evaluate American banks.

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THE INSTITUTION'S SCORE

Capital Score

Capital is a crucial measurement of an institution's financial strength. It works as a bulwark against losses and as protection for depositors when a bank is experiencing economic instability. When it comes to safety and soundness, the more capital, the better.

On our test to measure the adequacy of a bank's capital, Arkansas County Bank received a score of 12 out of a possible 30 points, falling short of the national average of 13.13.

A bank's Tier 1 capital ratio is a widely used measure of this buffer. Arkansas County Bank's Tier 1 capital ratio was 17.82 percent, higher than the 6 percent level considered adequate by regulators, but below the national average of 25.65 percent. A higher capital ratio suggests the bank will be better able to weather economic headwinds.

Overall, Arkansas County Bank held equity amounting to 10.26 percent of its assets, which was lower than the national average of 12.03 percent.

Asset Quality Score

In this test, Bankrate tries to determine the effect of troubled assets, such as unpaid mortgages, on the bank's loan loss reserves and overall capitalization.

A bank with lots of these types of assets may eventually be forced to use capital to absorb losses, reducing its equity cushion. It also means that there are likely to be many assets that are in non-accrual status and no longer earning money, reducing earnings and elevating the risk of a failure in the future.

On Bankrate's test of asset quality, Arkansas County Bank scored 28 out of a possible 40 points, less than the national average of 37.49 points.

The percentage of problem assets a bank holds compared to its total assets is a widely used indicator of asset quality.As of December 31, 2017, 4.29 percent of Arkansas County 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 known as an "allowance for loan and lease losses" to deal with troubled assets . How large that reserve is can be a helpful indicator when evaluating a bank's ability to manage problem assets, especially when compared to the total amount of problematic loans. Unfortunately, the FDIC did not provide information on Arkansas County Bank'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, giving a boost to its capital cushion, or use them to address problematic loans, potentially making the bank more resilient in tough times. However, banks that are losing money have less ability to do those things.

On Bankrate's earnings test, Arkansas County Bank scored 20 out of a possible 30, beating the national average of 15.12.

One key measure of a bank's earnings is return on equity, calculated by dividing net income (profit, basically) by total equity. The most recent annualized quarterly return on equity for Arkansas County Bank was 9.98 percent, above the national average of 8.10 percent.

The bank earned net income of $1.8 million on total equity of $17.3 million for the twelve months ended December 31, 2017. The bank reported an annualized return on average assets, or ROA, of 1.07 percent, above the 1 percent deemed satisfactory in accordance with industry standards, and above 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.