Safe and Sound

Central Bank & Trust Co.

Lexington, KY
4
Star Rating
Central Bank & Trust Co. is an FDIC-insured bank started in 1938 and currently based in Lexington, KY. Regulatory filings show the bank having equity of $267.9 million on $2.41 billion in assets, as of December 31, 2017.

Thanks to the efforts of 496 full-time employees in 26 offices in KY, the bank has amassed loans and leases worth $1.97 billion, including real estate loans of $1.54 billion. U.S. bank customers currently have $1.99 billion in deposits with the bank.

Overall, Bankrate believes that, as of December 31, 2017, Central Bank & Trust Co. exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Here's 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 strength. It works as a buffer against losses and affords protection for accountholders during times of economic trouble for the bank. From a safety and soundness perspective, the more capital, the better.

Central Bank & Trust Co. received a score of 12 out of a possible 30 points on our test to measure the adequacy of a bank's capital, below the national average of 13.13.

One commonly used measure of this buffer is a bank's Tier 1 capital ratio. Central Bank & Trust Co.'s Tier 1 capital ratio was 11.95 percent, higher than 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 downturns.

Overall, Central Bank & Trust Co. held equity amounting to 11.12 percent of its assets, which was lower than the national average of 12.03 percent.

Asset Quality Score

This test is intended to try to understand how the bank's capitalization and allocated loan loss reserves could be affected by troubled assets, such as unpaid loans.

A bank with a large number of these kinds of assets may eventually be required to use capital to absorb losses, cutting down on its cushion of equity. It also means that there are likely to be many assets that are in non-accrual status and thus aren't earning interest for the bank, resulting in lower earnings and potentially more risk of a failure in the future.

Central Bank & Trust Co. beat out the national average of 37.49 on Bankrate's test of asset quality, racking up 40 out of a possible 40 points .

The percentage of problem assets a bank holds compared to its total assets is a handy indicator of asset quality.As of December 31, 2017, 0.68 percent of Central Bank & Trust Co.'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 keep 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 problematic 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 Central Bank & Trust Co.'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, giving a boost to its capital cushion, or put them to work addressing problematic loans, likely making the bank better prepared to withstand financial trouble. Conversely, losses reduce a bank's ability to do those things.

Central Bank & Trust Co. scored 14 out of a possible 30 on Bankrate's earnings test, failing to reach the national average of 15.12.

One important measure of a bank's earnings is return on equity, calculated by dividing net income (essentially profit) by total equity. Central Bank & Trust Co.'s most recent annualized quarterly return on equity was 6.83 percent, below the national average of 8.10 percent.

For the twelve months ended December 31, 2017, the bank reported net income of $17.7 million on total equity of $267.9 million. The bank experienced an annualized return on average assets, or ROA, of 0.76 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.