Safe and Sound

Citizens Bank

Carthage, TN
5
Star Rating
Citizens Bank is an FDIC-insured bank founded in 1929 and currently based in Carthage, TN. Regulatory filings show the bank having equity of $105.9 million on $582.6 million in assets, as of December 31, 2017.

U.S. bank customers have $474.5 million on deposit at 8 offices in TN run by 76 full-time employees. With that footprint, the bank holds loans and leases worth $210.5 million, including real estate loans of $163.6 million.

Overall, Bankrate believes that, as of December 31, 2017, Citizens Bank exhibited a superior condition, earning a full 5 stars for safety and soundness. Here's an analysis of how the bank did on the three key criteria Bankrate used to evaluate American banks on safety and soundness.

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THE INSTITUTION'S SCORE

Capital Score

When it comes to measuring an a bank's financial fortitude, capital is useful. It works as a bulwark against losses and provides protection for depositors when a bank is experiencing economic trouble. When looking at safety and soundness, the higher the capital, the better.

Citizens Bank exceeded the national average of 13.13 points on our test to measure capital adequacy, achieving a score of 28 out of a possible 30 points.

One important measure of this buffer is a bank's Tier 1 capital ratio. Citizens Bank's Tier 1 capital ratio was 29.14 percent, higher than the 6 percent level regulators consider adequate, and higher than the national average of 25.65 percent. A higher capital ratio means the bank will be better able to weather financial difficulties.

Overall, Citizens Bank held equity amounting to 18.19 percent of its assets, which exceeded the national average of 12.03 percent.

Asset Quality Score

This test's purpose is to estimate how the bank's loan loss reserves and overall capitalization could be affected by troubled assets, such as unpaid mortgages.

Having large numbers of these types of assets could eventually require a bank to use capital to absorb losses, decreasing its buffer of equity. Many of those assets are also likely to be in non-accrual status and no longer earning money, reducing earnings and increasing the chances of a failure in the future.

Citizens Bank exceeded 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 useful indicator of asset quality.As of December 31, 2017, 0.62 percent of Citizens Bank's loans were noncurrent -- in other words, 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 to deal with problem assets known as an "allowance for loan and lease losses." Comparing the size of that reserve to the total amount of problem loans can be a useful indicator when evaluating a bank's ability to manage problem assets. Unfortunately, the FDIC did not provide information on Citizens Bank's loan loss allowance in its most recent filings.

Earnings score

A bank's ability to earn money has an effect on its safety and soundness. Earnings can be retained by the bank, giving a boost to its capital cushion, or be used to address problematic loans, potentially making the bank better able to withstand economic shocks. Losses, on the other hand, diminish a bank's ability to do those things.

On Bankrate's earnings test, Citizens Bank scored 20 out of a possible 30, above the national average of 15.12.

One widely used 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 was 12.52 percent, above the national average of 8.10 percent.

The bank earned net income of $12.5 million on total equity of $105.9 million for the twelve months ended December 31, 2017. The bank experienced an annualized return on average assets, or ROA, of 2.17 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.