Safe and Sound

Citizen's Bank

Ville Platte, LA
4
Star Rating
Citizen's Bank is a Ville Platte, LA-based, FDIC-insured bank that opened its doors in 1975. As of June 30, 2017, the bank had equity of $35.8 million on assets of $249.9 million.

Thanks to the work of 57 full-time employees in 3 offices in LA, the bank has amassed loans and leases worth $129.9 million, $104.6 million of which are for real estate. The bank currently holds $212.2 million in deposits from U.S. customers.

Overall, Bankrate believes that, as of June 30, 2017, Citizen's Bank exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Keep reading for a look at how the bank did on the three important criteria Bankrate used to grade American banks.

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SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

Capital works as a bulwark against losses and provides protection for accountholders when a bank is struggling financially. Therefore, a bank's level of capital is a key measurement of an institution's financial strength. From a safety and soundness perspective, the higher the capital, the better.
Citizen's Bank beat out the national average of 13.38 points on our test to measure the adequacy of a bank's capital, racking up 20 out of a possible 30 points.

One way to measure this buffer is looking at a bank's Tier 1 capital ratio. Citizen's Bank's Tier 1 capital ratio was 31.91 percent, above the 6 percent level regulators consider adequate, and above the national average of 25.16 percent. A higher capital ratio means the bank will be better able to stand up to economic headwinds.

Overall, Citizen's Bank held equity amounting to 14.33 percent of its assets, which exceeded the national average of 12.10 percent.

Asset Quality Score

Bankrate uses this test to determine the effect of troubled assets, such as past-due mortgages, on the bank's capitalization and allocated loan loss reserves.

A bank with a large number of these kinds of assets could eventually be required to use capital to cover losses, cutting down on its buffer of equity. Many of those assets are also likely to be in non-accrual status and no longer earning interest for the bank, resulting in reduced earnings and potentially more risk of a future failure.

Citizen's Bank scored 40 out of a possible 40 points on Bankrate's asset quality test, beating out the national average of 37.62.

The percentage of problem assets a bank holds compared to its total assets is a widely used indicator of asset quality.As of June 30, 2017, 0.46 percent of Citizen's Bank'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 1.04 percent.

Banks keep a reserve known as an "allowance for loan and lease losses" to deal with troubled assets . That reserve's size can be a useful 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 Citizen's Bank's loan loss allowance in its most recent filings.

Earnings score

A bank's earnings performance affects its long-term survivability. A bank can retain its earnings, increasing its capital cushion, or put them to work addressing problematic loans, likely making the bank more resilient in times of trouble. Obviously, banks that are losing money have less ability to do those things.

Citizen's Bank scored 6 out of a possible 30 on Bankrate's earnings test, less than the national average of 16.52.

Return on equity, calculated by dividing net income (profit, basically) by the total amount of equity, is one important way to measure a bank's earnings. The most recent annualized quarterly return on equity for Citizen's Bank was 2.17 percent, below the national average of 9.28 percent.

For the twelve months ended June 30, 2017, the bank recorded net income of $388,000 on total equity of $35.8 million. The bank reported an annualized return on average assets, or ROA, of 0.31 percent, below the 1 percent deemed satisfactory in accordance with industry standards and below the average for U.S. banks of 1.14 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.