Safe and Sound

Community First Bank & Trust

Columbia, TN
3
Star Rating
Columbia, TN-based Community First Bank & Trust is an FDIC-insured bank started in 1999. As of December 31, 2017, the bank held equity of $40.1 million on assets of $476.5 million.

U.S. bank customers have $433.3 million on deposit at 8 offices in TN run by 100 full-time employees. With that footprint, the bank has amassed loans and leases worth $317.1 million, including real estate loans of $296.4 million.

Overall, Bankrate believes that, as of December 31, 2017, Community First Bank & Trust exhibited a generally satisfactory condition, earning 3 out of 5 stars for safety and soundness. Keep reading for a breakdown of how the bank fared on the three important criteria Bankrate used to evaluate American banks.

WHAT IS
SAFE AND SOUND?

Find out

THE INSTITUTION'S SCORE

Capital Score

Capital works as a cushion against losses and provides protection for depositors when a bank is experiencing economic instability. It follows then that a bank's level of capital is a crucial measurement of a bank's financial fortitude. From a safety and soundness perspective, the more capital, the better.

On our test to measure capital adequacy, Community First Bank & Trust received a score of 8 out of a possible 30 points, falling short of the national average of 13.13.

One essential measure of this buffer is a bank's Tier 1 capital ratio. Community First Bank & Trust's Tier 1 capital ratio was 11.23 percent, above 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 stand up to economic downturns.

Overall, Community First Bank & Trust held equity amounting to 8.42 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 loan loss reserves and overall capitalization could be affected by problem assets, such as unpaid mortgages.

A bank with a large number of these types of assets may eventually be required to use capital to absorb losses, diminishing its equity cushion. Many of those assets are also likely to be in non-accrual status and thus aren't earning money, resulting in lower earnings and potentially more risk of a failure in the future.

On Bankrate's test of asset quality, Community First Bank & Trust scored 36 out of a possible 40 points, less than the national average of 37.49 points.

The percentage of problem assets a bank holds compared to its total assets is a widely used indicator of asset quality.As of December 31, 2017, 0.93 percent of Community First Bank & Trust'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 keep a reserve known as an "allowance for loan and lease losses" to deal with problem assets . The size of that reserve can be a handy indicator when evaluating a bank's ability to manage troubled assets, especially when compared to the total amount of problematic loans. Unfortunately, the FDIC did not provide information on Community First Bank & Trust's loan loss allowance in its most recent filings.

Earnings score

How profitable a bank is affects its long-term survivability. Earnings can be retained by the bank, giving a boost to its capital buffer, or be used to deal with problematic loans, likely making the bank better able to withstand economic shocks. Losses, on the other hand, reduce a bank's ability to do those things.

On Bankrate's earnings test, Community First Bank & Trust scored 8 out of a possible 30, coming in below the national average of 15.12.

One important way to measure a bank's earnings is return on equity, or net income (essentially profit) divided by the total amount of equity. Community First Bank & Trust's most recent annualized quarterly return on equity was 3.18 percent, below the national average of 8.10 percent.

The bank reported net income of $1.4 million on total equity of $40.1 million for the twelve months ended December 31, 2017. The bank had an annualized return on average assets, or ROA, of 0.30 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.