Safe and Sound

Bedford Loan & Deposit Bank

Bedford, KY
4
Star Rating
Founded in 1891, Bedford Loan & Deposit Bank is an FDIC-insured bank based in Bedford, KY. As of December 31, 2017, the bank held equity of $12.3 million on $94.0 million in assets.

With 32 full-time employees in 3 offices in KY, the bank has amassed loans and leases worth $50.6 million, including real estate loans of $40.3 million. U.S. bank customers currently have $76.5 million in deposits with the bank.

Overall, Bankrate believes that, as of December 31, 2017, Bedford Loan & Deposit Bank exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Keep reading for an analysis of how the bank fared on the three key criteria Bankrate used to grade U.S. banks.

WHAT IS
SAFE AND SOUND?

Find out

THE INSTITUTION'S SCORE

Capital Score

Capital works as a bulwark against losses and as protection for depositors during periods of financial instability for the bank. Therefore, a bank's level of capital is an important measurement of an institution's financial fortitude. From a safety and soundness perspective, more capital is better.

Bedford Loan & Deposit Bank racked up 18 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. Bedford Loan & Deposit Bank's Tier 1 capital ratio was 23.80 percent, exceeding the 6 percent level regulators consider adequate, but under the national average of 25.65 percent. The higher the capital ratio, the better the bank will be able to weather financial difficulties.

Overall, Bedford Loan & Deposit Bank held equity amounting to 13.11 percent of its assets, which exceeded the national average of 12.03 percent.

Asset Quality Score

In this test, Bankrate tries to determine the impact of problem assets, such as unpaid loans, on the bank's capitalization and allocated loan loss reserves.

Having a large number of these kinds of assets may eventually require a bank to use capital to absorb losses, diminishing its equity buffer. Many of those assets are also likely to be in non-accrual status and thus aren't earning interest for the bank, reducing earnings and increasing the chances of a failure in the future.

On Bankrate's test of asset quality, Bedford Loan & Deposit Bank scored 36 out of a possible 40 points, coming in below 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, 3.15 percent of Bedford Loan & Deposit Bank'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 keep a reserve known as an "allowance for loan and lease losses" to deal with problem assets . Comparing the reserve's size to the total amount of problematic loans can be a handy indicator when evaluating a bank's ability to manage problem assets. Unfortunately, the FDIC did not provide information on Bedford Loan & Deposit Bank's loan loss allowance in its most recent filings.

Earnings score

A bank's profitability affects its long-term survivability. Earnings can be retained by the bank, giving a boost to its capital cushion, or be used to address problematic loans, potentially making the bank better prepared to withstand economic shocks. Conversely, losses take away from a bank's ability to do those things.

Bedford Loan & Deposit Bank underperformed the average on Bankrate's test of earnings, achieving a score of 10 out of a possible 30.

One key way to measure a bank's earnings is return on equity, calculated by dividing net income (profit, essentially) by the total amount of equity. The most recent annualized quarterly return on equity for Bedford Loan & Deposit Bank was 4.27 percent, below the national average of 8.10 percent.

The bank earned net income of $529,000 on total equity of $12.3 million for the twelve months ended December 31, 2017. The bank reported an annualized return on average assets, or ROA, of 0.57 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.