Safe and Sound

Citizens Bank and Trust Company of Grainger County

Rutledge, TN
5
Star Rating
Rutledge, TN-based Citizens Bank and Trust Company of Grainger County is an FDIC-insured bank started in 1919. As of December 31, 2017, the bank had equity of $34.1 million on $208.1 million in assets.

Thanks to the work of 49 full-time employees in 5 offices in TN, the bank has amassed loans and leases worth $58.5 million, including $49.4 million worth of real estate loans. U.S. bank customers currently have $173.4 million in deposits with the bank.

Overall, Bankrate believes that, as of December 31, 2017, Citizens Bank and Trust Company of Grainger County exhibited a superior condition, earning a full 5 stars for safety and soundness. Keep reading for a look at how the bank fared on the three key criteria Bankrate used to grade American banks on safety and soundness.

WHAT IS
SAFE AND SOUND?

Find out

THE INSTITUTION'S SCORE

Capital Score

Capital works as a buffer against losses and affords protection for depositors when a bank is experiencing financial trouble. Therefore, a bank's level of capital is a useful measurement of an institution's financial resilience. From a safety and soundness perspective, the more capital, the better.

Citizens Bank and Trust Company of Grainger County beat out the national average of 13.13 points on our test to measure capital adequacy, racking up 24 out of a possible 30 points.

One widely followed measure of this buffer is a bank's Tier 1 capital ratio. Citizens Bank and Trust Company of Grainger County's Tier 1 capital ratio was 33.66 percent, above the 6 percent level considered adequate by regulators, and exceeding the national average of 25.65 percent. The higher the capital ratio, the better the bank will be able to stand up to economic challenges.

Overall, Citizens Bank and Trust Company of Grainger County held equity amounting to 16.38 percent of its assets, which exceeded the national average of 12.03 percent.

Asset Quality Score

This test's purpose is to try to understand how the bank's loan loss reserves and overall capitalization could be affected by troubled assets, such as past-due loans.

Having lots of these kinds of assets suggests a bank could eventually have to use capital to cover losses, diminishing its cushion 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 diminished earnings and potentially more risk of a failure in the future.

Citizens Bank and Trust Company of Grainger County scored 36 out of a possible 40 points on Bankrate's test of asset quality, falling short of the national average of 37.49.

The percentage of problem assets a bank holds compared to its total assets is a useful indicator of asset quality.As of December 31, 2017, 5.92 percent of Citizens Bank and Trust Company of Grainger County's loans were noncurrent, meaning 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 to deal with problem assets known as an "allowance for loan and lease losses." Comparing how large that reserve is to the total amount of problematic loans can be a handy indicator when evaluating a bank's ability to manage troubled assets. Unfortunately, the FDIC did not provide information on Citizens Bank and Trust Company of Grainger County's loan loss allowance in its most recent filings.

Earnings score

A bank's ability to earn money affects its safety and soundness. A bank can retain its earnings, boosting its capital cushion, or use them to address 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.

Citizens Bank and Trust Company of Grainger County fell short of the national average on Bankrate's earnings test, achieving a score of 12 out of a possible 30.

Return on equity, calculated by dividing net income (profit, basically) by total equity, is one important measure of a bank's earnings. The most recent annualized quarterly return on equity for Citizens Bank and Trust Company of Grainger County was 5.49 percent, below the national average of 8.10 percent.

The bank reported net income of $1.9 million on total equity of $34.1 million for the twelve months ended December 31, 2017. The bank experienced an annualized return on average assets, or ROA, of 0.90 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.