Safe and Sound

Citizens Bank & Trust Co. of Jackson

Jackson, KY
2
Star Rating
Citizens Bank & Trust Co. of Jackson is a Jackson, KY-based, FDIC-insured bank dating back to 1962. As of December 31, 2017, the bank had equity of $12.6 million on assets of $143.8 million.

Thanks to the efforts of 51 full-time employees in 3 offices in KY, the bank has amassed loans and leases worth $111.3 million, including real estate loans of $86.8 million. U.S. bank customers currently have $128.6 million in deposits with the bank.

Overall, Bankrate believes that, as of December 31, 2017, Citizens Bank & Trust Co. of Jackson exhibited a below-average condition, earning 2 out of 5 stars for safety and soundness. Keep reading for an analysis of how the bank did on the three important criteria Bankrate used to score American banks.

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THE INSTITUTION'S SCORE

Capital Score

Capital works as a cushion against losses and affords protection for depositors during periods of economic trouble for the bank. It follows then that when it comes to measuring an an institution's financial resilience, capital is useful. When it comes to safety and soundness, the more capital, the better.

Citizens Bank & Trust Co. of Jackson received a score of 6 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 way to measure this buffer is looking at a bank's Tier 1 capital ratio. Citizens Bank & Trust Co. of Jackson's Tier 1 capital ratio was 9.43 percent, higher than the 6 percent level regulators consider adequate, but below the national average of 25.65 percent. A higher capital ratio means the bank will be better able to weather economic challenges.

Overall, Citizens Bank & Trust Co. of Jackson held equity amounting to 8.76 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.

Having extensive holdings of these types of assets could eventually require a bank to use capital to absorb losses, cutting down on its equity buffer. Many of those assets are also likely to be in non-accrual status and thus aren't earning money, resulting in reduced earnings and potentially more risk of a failure in the future.

Citizens Bank & Trust Co. of Jackson came in below the national average of 37.49 on Bankrate's asset quality test, racking up 28 out of a possible 40 points .

A helpful indicator of asset quality is the percentage of problem assets a bank holds compared to its total assets. As of December 31, 2017, 2.20 percent of Citizens Bank & Trust Co. of Jackson'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 maintain a reserve known as an "allowance for loan and lease losses" to deal with troubled assets . How large that reserve is can be a useful 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 & Trust Co. of Jackson's loan loss allowance in its most recent filings.

Earnings score

How profitable a bank is has an effect on its safety and soundness. Earnings may be retained by the bank, giving a boost to its capital cushion, or be used to address problematic loans, likely making the bank better prepared to withstand financial shocks. Losses, on the other hand, reduce a bank's ability to do those things.

Citizens Bank & Trust Co. of Jackson fell short of the national average on Bankrate's test of earnings, achieving a score of 0 out of a possible 30.

One key measure of a bank's earnings is return on equity, calculated by dividing net income (profit, essentially) by total equity. The most recent annualized quarterly return on equity for Citizens Bank & Trust Co. of Jackson was -2.67 percent, below the national average of 8.10 percent.

The bank earned net income of $-356,000 on total equity of $12.6 million for the twelve months ended December 31, 2017. The bank had an annualized return on average assets, or ROA, of -0.24 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.