Safe and Sound

Community Trust Bank

Irvington, IL
4
Star Rating
Irvington, IL-based Community Trust Bank is an FDIC-insured bank started in 1934. Regulatory filings show the bank having equity of $11.9 million on assets of $87.0 million, as of December 31, 2017.

U.S. bank customers have $73.5 million on deposit at 3 offices in IL run by 23 full-time employees. With that footprint, the bank currently holds loans and leases worth $47.8 million, including $31.2 million worth of real estate loans.

Overall, Bankrate believes that, as of December 31, 2017, Community Trust Bank exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Keep reading for a breakdown of how the bank fared on the three key criteria Bankrate used to grade U.S. banks.

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THE INSTITUTION'S SCORE

Capital Score

Capital acts as a buffer against losses and affords protection for depositors during times of financial instability for the bank. It follows then that when it comes to measuring an an institution's financial resilience, capital is key. When it comes to safety and soundness, the higher the capital, the better.

On our test to measure capital adequacy, Community Trust Bank achieved a score of 18 out of a possible 30 points, above the national average of 13.13.

One widely used measure of this buffer is a bank's Tier 1 capital ratio. Community Trust Bank's Tier 1 capital ratio was 22.25 percent, higher than the 6 percent level considered adequate by regulators, but less than the national average of 25.65 percent. The higher the capital ratio, the better the bank will be able to weather economic challenges.

Overall, Community Trust Bank held equity amounting to 13.67 percent of its assets, which exceeded the national average of 12.03 percent.

Asset Quality Score

In this test, Bankrate tries to estimate the impact of problem assets, such as unpaid loans, on the bank's loan loss reserves and overall capitalization.

A bank with lots of these kinds of assets may eventually be forced to use capital to absorb losses, reducing its equity buffer. It also means that there are likely to be many assets that are in non-accrual status and no longer earning money, diminishing earnings and increasing the risk of a future failure.

Community Trust Bank scored 36 out of a possible 40 points on Bankrate's asset quality test, coming in below 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, 2.21 percent of Community Trust 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 keep a reserve known as an "allowance for loan and lease losses" to deal with troubled assets . How large that reserve is can be a widely used indicator when evaluating a bank's ability to manage troubled assets, especially when compared to the total amount of problem loans. Unfortunately, the FDIC did not provide information on Community Trust Bank's loan loss allowance in its most recent filings.

Earnings score

A bank's profitability has an effect on its safety and soundness. A bank can retain its earnings, giving a boost to its capital cushion, or put them to work addressing problematic loans, likely making the bank more resilient in times of trouble. Losses, on the other hand, reduce a bank's ability to do those things.

On Bankrate's earnings test, Community Trust Bank scored 12 out of a possible 30, below the national average of 15.12.

One key way to measure a bank's earnings is return on equity, or net income (profit, essentially) divided by the total amount of equity. Community Trust Bank's most recent annualized quarterly return on equity was 5.20 percent, below the national average of 8.10 percent.

The bank reported net income of $615,000 on total equity of $11.9 million for the twelve months ended December 31, 2017. The bank experienced an annualized return on average assets, or ROA, of 0.74 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.