Safe and Sound

Citizens Deposit Bank of Arlington, Inc.

Arlington, KY
5
Star Rating
Citizens Deposit Bank of Arlington, Inc. is an FDIC-insured bank founded in 1949 and currently based in Arlington, KY. Regulatory filings show the bank having equity of $31.2 million on assets of $209.6 million, as of December 31, 2017.

With 42 full-time employees in 3 offices in KY, the bank holds loans and leases worth $138.3 million, including real estate loans of $93.1 million. U.S. bank customers currently have $157.9 million in deposits with the bank.

Overall, Bankrate believes that, as of December 31, 2017, Citizens Deposit Bank of Arlington, Inc. exhibited a superior condition, earning a full 5 stars for safety and soundness. Here's a look at how the bank fared on the three major criteria Bankrate used to grade American banks on safety and soundness.

WHAT IS
SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

Capital works as a bulwark against losses and affords protection for depositors when a bank is experiencing economic instability. Therefore, when it comes to measuring an an institution's financial stability, capital is valuable. When looking at safety and soundness, the higher the capital, the better.

Citizens Deposit Bank of Arlington, Inc. beat out the national average of 13.13 points on our test to measure the adequacy of a bank's capital, receiving a score of 20 out of a possible 30 points.

A bank's Tier 1 capital ratio is a widely used measure of this buffer. Citizens Deposit Bank of Arlington, Inc.'s Tier 1 capital ratio was 20.56 percent, exceeding the 6 percent level regulators consider adequate, but below the national average of 25.65 percent. A higher capital ratio suggests the bank will be better able to weather financial downturns.

Overall, Citizens Deposit Bank of Arlington, Inc. held equity amounting to 14.88 percent of its assets, which exceeded the national average of 12.03 percent.

Asset Quality Score

Bankrate uses this test to determine the impact of problem assets, such as past-due loans, on the bank's reserves set aside to cover loan losses, as well as overall capitalization.

Having large numbers of these types of assets means a bank may eventually have to use capital to cover losses, diminishing its buffer of equity. It also means that there are likely to be many assets that are in non-accrual status and thus aren't earning interest for the bank, resulting in reduced earnings and potentially more risk of a failure in the future.

Citizens Deposit Bank of Arlington, Inc. scored 40 out of a possible 40 points on Bankrate's test of asset quality, better than the national average of 37.49.

The percentage of problem assets a bank holds compared to its total assets is a helpful indicator of asset quality.As of December 31, 2017, 0.69 percent of Citizens Deposit Bank of Arlington, Inc.'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 1.01 percent.

Banks maintain a reserve to deal with problem assets known as an "allowance for loan and lease losses." How large that reserve is can be a helpful 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 Deposit Bank of Arlington, Inc.'s loan loss allowance in its most recent filings.

Earnings score

A bank's ability to earn money has an effect on its long-term survivability. Earnings may be retained by the bank, giving a boost to its capital buffer, or be used to address problematic loans, potentially making the bank better prepared to withstand economic trouble. Conversely, losses diminish a bank's ability to do those things.

Citizens Deposit Bank of Arlington, Inc. scored 20 out of a possible 30 on Bankrate's earnings test, beating out the national average of 15.12.

One key way to measure a bank's earnings is return on equity, or net income (profit, basically) divided by the total amount of equity. The most recent annualized quarterly return on equity for Citizens Deposit Bank of Arlington, Inc. was 12.22 percent, above the national average of 8.10 percent.

For the twelve months ended December 31, 2017, the bank recorded net income of $3.7 million on total equity of $31.2 million. The bank had an annualized return on average assets, or ROA, of 1.82 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.