Safe and Sound

Bank of Dickson

Dickson, TN
4
Star Rating
Bank of Dickson is an FDIC-insured bank founded in 1954 and currently headquartered in Dickson, TN. As of December 31, 2017, the bank had equity of $28.5 million on $223.8 million in assets.

Thanks to the efforts of 50 full-time employees in 4 offices in TN, the bank currently holds loans and leases worth $136.5 million, including real estate loans of $120.8 million. The bank currently holds $190.6 million in deposits from U.S. customers.

Overall, Bankrate believes that, as of December 31, 2017, Bank of Dickson exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Keep reading for a look at how the bank fared on the three important criteria Bankrate used to score U.S. banks.

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THE INSTITUTION'S SCORE

Capital Score

Capital is a useful measurement of a bank's financial fortitude. It acts as a buffer against losses and affords protection for accountholders during periods of financial instability for the bank. From a safety and soundness perspective, the higher the capital, the better.

Bank of Dickson achieved a score of 16 out of a possible 30 points on our test to measure capital adequacy, above the national average of 13.13.

One way to measure this buffer is looking at a bank's Tier 1 capital ratio. Bank of Dickson's Tier 1 capital ratio was 24.39 percent, exceeding the 6 percent level considered adequate by regulators, but less than the national average of 25.65 percent. The higher the capital ratio, the better the bank will be able to stand up to financial downturns.

Overall, Bank of Dickson held equity amounting to 12.75 percent of its assets, which exceeded the national average of 12.03 percent.

Asset Quality Score

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

A bank with lots of these kinds of assets could eventually be required to use capital to cover losses, shrinking its equity cushion. Many of those assets are also likely to be in non-accrual status and thus aren't earning interest for the bank, resulting in diminished earnings and potentially more risk of a failure in the future.

Bank of Dickson scored 36 out of a possible 40 points on Bankrate's test of asset quality, less than the national average of 37.49.

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, 1.70 percent of Bank of Dickson's loans were noncurrent -- in other words, 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 . Comparing how large that reserve is to the total amount of at-risk loans can be a widely used indicator when evaluating a bank's ability to manage problem assets. Unfortunately, the FDIC did not provide information on Bank of Dickson's loan loss allowance in its most recent filings.

Earnings score

How profitable a bank is affects its safety and soundness. A bank can retain its earnings, boosting its capital buffer, or put them to work addressing problematic loans, potentially making the bank better able to withstand economic shocks. Losses, on the other hand, take away from a bank's ability to do those things.

On Bankrate's earnings test, Bank of Dickson scored 12 out of a possible 30, less than the national average of 15.12.

Return on equity, calculated by dividing net income (profit, basically) by total equity, is one important way to measure a bank's earnings. The most recent annualized quarterly return on equity for Bank of Dickson was 5.64 percent, below the national average of 8.10 percent.

The bank reported net income of $1.6 million on total equity of $28.5 million for the twelve months ended December 31, 2017. The bank had an annualized return on average assets, or ROA, of 0.72 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.