Safe and Sound

Citizens Tri-County Bank

Dunlap, TN
5
Star Rating
Citizens Tri-County Bank is an FDIC-insured bank founded in 1972 and currently based in Dunlap, TN. As of December 31, 2017, the bank had equity of $81.9 million on $826.3 million in assets.

Thanks to the work of 269 full-time employees in 26 offices in TN, the bank currently holds loans and leases worth $487.7 million, including $389.9 million worth of real estate loans. The bank currently holds $733.7 million in deposits from U.S. customers.

Overall, Bankrate believes that, as of December 31, 2017, Citizens Tri-County Bank exhibited a superior condition, earning a full 5 stars for safety and soundness. Here's a breakdown of how the bank fared on the three key criteria Bankrate used to grade American banks on safety and soundness.

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THE INSTITUTION'S SCORE

Capital Score

When it comes to measuring an an institution's financial fortitude, capital is important. It works as a bulwark against losses and affords protection for depositors when a bank is experiencing financial trouble. From a safety and soundness perspective, the more capital, the better.

Citizens Tri-County Bank received a score of 10 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 Tri-County Bank's Tier 1 capital ratio was 17.21 percent, above the 6 percent level regulators consider adequate, but under the national average of 25.65 percent. The higher the capital ratio, the better the bank will be able to stand up to economic downturns.

Overall, Citizens Tri-County Bank held equity amounting to 9.91 percent of its assets, which was lower than the national average of 12.03 percent.

Asset Quality Score

This test's purpose is to estimate how the bank's capitalization and allocated loan loss reserves could be affected by problem assets, such as past-due mortgages.

Having extensive holdings of these types of assets means a bank may eventually have to use capital to absorb losses, diminishing its equity cushion. It also means that there are likely to be many assets that are in non-accrual status and no longer earning money, resulting in diminished earnings and potentially more risk of a future failure.

Citizens Tri-County Bank scored 36 out of a possible 40 points on Bankrate's asset quality test, less than the national average of 37.49.

A useful indicator of asset quality is the percentage of problem assets a bank holds compared to its total assets. As of December 31, 2017, 1.92 percent of Citizens Tri-County Bank'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 . That reserve's size can be a useful indicator when evaluating a bank's ability to manage problem assets, especially when compared to the total amount of problematic loans. Unfortunately, the FDIC did not provide information on Citizens Tri-County Bank's loan loss allowance in its most recent filings.

Earnings score

A bank's earnings performance affects its safety and soundness. A bank can retain its earnings, expanding its capital buffer, or put them to work addressing problematic loans, likely making the bank more resilient in times of trouble. However, banks that are losing money are less able to do those things.

Citizens Tri-County Bank did above-average on Bankrate's earnings test, achieving a score of 24 out of a possible 30.

One widely used measure of a bank's earnings is return on equity, calculated by dividing net income (essentially profit) by total equity. Citizens Tri-County Bank's most recent annualized quarterly return on equity was 15.77 percent, above the national average of 8.10 percent.

The bank recorded net income of $13.0 million on total equity of $81.9 million for the twelve months ended December 31, 2017. The bank had an annualized return on average assets, or ROA, of 1.59 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.