Safe and Sound

Citizens Bank of Cumberland County, Inc.

Burkesville, KY
5
Star Rating
Citizens Bank of Cumberland County, Inc. is an FDIC-insured bank founded in 2000 and currently based in Burkesville, KY. Regulatory filings show the bank having equity of $9.9 million on assets of $74.7 million, as of December 31, 2017.

With 22 full-time employees, the bank currently holds loans and leases worth $51.9 million, including real estate loans of $39.2 million. U.S. bank customers currently have $64.0 million in deposits with the bank.

Overall, Bankrate believes that, as of December 31, 2017, Citizens Bank of Cumberland County, Inc. exhibited a superior condition, earning a full 5 stars for safety and soundness. Here's a breakdown of how the bank did on the three major criteria Bankrate used to evaluate U.S. banks on safety and soundness.

WHAT IS
SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

When it comes to measuring an an institution's financial fortitude, capital is key. It acts as a bulwark against losses and provides protection for accountholders during times of financial trouble for the bank. When looking at safety and soundness, more capital is better.

On our test to measure capital adequacy, Citizens Bank of Cumberland County, Inc. achieved a score of 18 out of a possible 30 points, better than the national average of 13.13.

A bank's Tier 1 capital ratio is a commonly used measure of this buffer. Citizens Bank of Cumberland County, Inc.'s Tier 1 capital ratio was 18.35 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 challenges.

Overall, Citizens Bank of Cumberland County, Inc. held equity amounting to 13.27 percent of its assets, which exceeded 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 problem assets, such as unpaid loans.

A bank with lots of these kinds of assets could eventually be forced to use capital to absorb losses, cutting down on 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, pushing down earnings and increasing the chances of a future failure.

Citizens Bank of Cumberland County, Inc. finished below the national average of 37.49 on Bankrate's test of asset quality, racking up 36 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, 1.49 percent of Citizens Bank of Cumberland County, Inc.'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 maintain a reserve to deal with troubled assets known as an "allowance for loan and lease losses." That reserve's size can be a widely used indicator when evaluating a bank's ability to manage problem assets, especially when compared to the total amount of at-risk loans. Unfortunately, the FDIC did not provide information on Citizens Bank of Cumberland County, Inc.'s loan loss allowance in its most recent filings.

Earnings score

How profitable a bank is affects its long-term survivability. Earnings can be retained by the bank, expanding its capital cushion, or be used to deal with problematic loans, likely making the bank better able to withstand financial trouble. Losses, on the other hand, take away from a bank's ability to do those things.

On Bankrate's test of earnings, Citizens Bank of Cumberland County, Inc. scored 22 out of a possible 30, beating out the national average of 15.12.

One important measure of a bank's earnings is return on equity, or net income (profit, essentially) divided by the total amount of equity. The most recent annualized quarterly return on equity for Citizens Bank of Cumberland County, Inc. was 14.62 percent, above the national average of 8.10 percent.

For the twelve months ended December 31, 2017, the bank earned net income of $1.4 million on total equity of $9.9 million. The bank had an annualized return on average assets, or ROA, of 1.87 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.