Safe and Sound

Bank of Putnam County

Cookeville, TN
5
Star Rating
Bank of Putnam County is an FDIC-insured bank founded in 1901 and currently based in Cookeville, TN. Regulatory filings show the bank having equity of $59.0 million on $779.5 million in assets, as of December 31, 2017.

Thanks to the efforts of 175 full-time employees in 14 offices in TN, the bank holds loans and leases worth $430.6 million, $368.8 million of which are for real estate. U.S. bank customers currently have $710.2 million in deposits with the bank.

Overall, Bankrate believes that, as of December 31, 2017, Bank of Putnam County exhibited a superior condition, earning a full 5 stars for safety and soundness. Here's a look at how the bank did on the three major 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 buffer against losses and affords protection for account holders during periods of financial trouble for the bank. It follows then that a bank's level of capital is an important measurement of an institution's financial resilience. When it comes to safety and soundness, the more capital, the better.

On our test to measure capital adequacy, Bank of Putnam County received a score of 6 out of a possible 30 points, falling short of the national average of 13.13.

One way to measure this buffer is looking at a bank's Tier 1 capital ratio. Bank of Putnam County's Tier 1 capital ratio was 14.96 percent, above the 6 percent level regulators consider adequate, but less than the national average of 25.65 percent. A higher capital ratio suggests the bank will be better able to weather financial downturns.

Overall, Bank of Putnam County held equity amounting to 7.57 percent of its assets, which was lower than the national average of 12.03 percent.

Asset Quality Score

This test's purpose is to estimate how the bank's reserves set aside to cover loan losses, as well as overall capitalization, could be affected by troubled assets, such as unpaid mortgages.

Having large numbers of these kinds of assets may eventually force a bank to use capital to cover losses, reducing its cushion of equity. Many of those assets are also likely to be in non-accrual status and no longer earning money, resulting in diminished earnings and potentially more risk of a failure in the future.

On Bankrate's test of asset quality, Bank of Putnam County scored 40 out of a possible 40 points, exceeding the national average of 37.49 points.

The percentage of problem assets a bank holds compared to its total assets is a helpful indicator of asset quality.As of December 31, 2017, 0.08 percent of Bank of Putnam County'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 1.01 percent.

Banks maintain a reserve known as an "allowance for loan and lease losses" to deal with troubled assets . The size of that reserve can be a helpful indicator when evaluating a bank's ability to manage problem assets, especially when compared to the total amount of problem loans. Unfortunately, the FDIC did not provide information on Bank of Putnam County's loan loss allowance in its most recent filings.

Earnings score

How profitable a bank is has an effect on its safety and soundness. Earnings may be retained by the bank, increasing its capital cushion, or be used to deal with problematic loans, potentially making the bank more resilient in times of trouble. However, banks that are losing money are less able to do those things.

Bank of Putnam County received above-average marks on Bankrate's test of earnings, achieving a score of 24 out of a possible 30.

One widely used way to measure a bank's earnings is return on equity, or net income (essentially profit) divided by total equity. The most recent annualized quarterly return on equity for Bank of Putnam County was 16.28 percent, above the national average of 8.10 percent.

The bank recorded net income of $9.3 million on total equity of $59.0 million for the twelve months ended December 31, 2017. The bank reported an annualized return on average assets, or ROA, of 1.22 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.