Safe and Sound

Community Bank and Trust - Alabama

Union Springs, AL
1
Star Rating
Founded in 1990, Community Bank and Trust - Alabama is an FDIC-insured bank based in Union Springs, AL. Regulatory filings show the bank having equity of $3.0 million on assets of $52.0 million, as of December 31, 2017.

Thanks to the efforts of 15 full-time employees, the bank holds loans and leases worth $16.1 million, $11.7 million of which are for real estate. The bank currently holds $49.0 million in deposits from U.S. customers.

Overall, Bankrate believes that, as of December 31, 2017, Community Bank and Trust - Alabama exhibited a significantly below-average condition, earning 1 out of 5 stars for safety and soundness. Keep reading for a breakdown of how the bank did on the three important criteria Bankrate used to evaluate American banks.

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THE INSTITUTION'S SCORE

Capital Score

When it comes to measuring an an institution's financial fortitude, capital is essential. It works as a bulwark against losses and as protection for accountholders during periods of financial trouble for the bank. When it comes to safety and soundness, the more capital, the better.

Community Bank and Trust - Alabama finished below the national average of 13.13 on our test to measure the adequacy of a bank's capital, achieving a score of 2 out of a possible 30 points.

One important measure of this buffer is a bank's Tier 1 capital ratio. Community Bank and Trust - Alabama's Tier 1 capital ratio was 18.40 percent, exceeding 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 weather economic difficulties.

Overall, Community Bank and Trust - Alabama held equity amounting to 5.75 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 troubled assets, such as past-due loans.

Having a large number of these types of assets suggests a bank could eventually have to use capital to absorb losses, reducing its cushion of equity. It also means that there are likely to be many assets that are in non-accrual status and thus aren't earning money, resulting in diminished earnings and potentially more risk of a future failure.

On Bankrate's test of asset quality, Community Bank and Trust - Alabama scored 16 out of a possible 40 points, lower than the national average of 37.49 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, 2.72 percent of Community Bank and Trust - Alabama'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 problem assets known as an "allowance for loan and lease losses." Comparing how large that reserve is to the total amount of at-risk loans can be a helpful indicator when evaluating a bank's ability to manage problem assets. Unfortunately, the FDIC did not provide information on Community Bank and Trust - Alabama's loan loss allowance in its most recent filings.

Earnings score

A bank's profitability has an effect on its safety and soundness. Earnings can be retained by the bank, increasing its capital buffer, or be used to deal with problematic loans, potentially making the bank better able to withstand financial trouble. Banks that are losing money, however, have less ability to do those things.

Community Bank and Trust - Alabama scored 0 out of a possible 30 on Bankrate's test of earnings, falling short of the national average of 15.12.

Return on equity, calculated by dividing net income (profit, basically) by the total amount of equity, is one important way to measure a bank's earnings. Community Bank and Trust - Alabama's most recent annualized quarterly return on equity was 1.86 percent, below the national average of 8.10 percent.

The bank earned net income of $56,000 on total equity of $3.0 million for the twelve months ended December 31, 2017. The bank had an annualized return on average assets, or ROA, of 0.11 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.