Safe and Sound

De Witt Bank and Trust Company

De Witt, AR
5
Star Rating
De Witt Bank and Trust Company is a De Witt, AR-based, FDIC-insured bank founded in 1929. As of December 31, 2017, the bank had equity of $18.3 million on $94.0 million in assets.

U.S. bank customers have $75.0 million on deposit at 2 offices in AR run by 21 full-time employees. With that footprint, the bank holds loans and leases worth $25.2 million, $16.4 million of which are for real estate.

Overall, Bankrate believes that, as of December 31, 2017, De Witt Bank and Trust Company exhibited a superior condition, earning a full 5 stars for safety and soundness. Here's an analysis of how the bank fared on the three important criteria Bankrate used to evaluate U.S. banks on safety and soundness.

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THE INSTITUTION'S SCORE

Capital Score

Capital is an essential measurement of a bank's financial fortitude. It acts as a cushion against losses and affords protection for depositors when a bank is struggling financially. When it comes to safety and soundness, the higher the capital, the better.

De Witt Bank and Trust Company scored above the national average of 13.13 points on our test to measure the adequacy of a bank's capital, racking up 26 out of a possible 30 points.

A bank's Tier 1 capital ratio is an important measure of this buffer. De Witt Bank and Trust Company's Tier 1 capital ratio was 28.00 percent, higher than the 6 percent level regulators consider adequate, and above the national average of 25.65 percent. The higher the capital ratio, the better the bank will be able to stand up to financial downturns.

Overall, De Witt Bank and Trust Company held equity amounting to 19.48 percent of its assets, which exceeded the national average of 12.03 percent.

Asset Quality Score

Bankrate uses this test to estimate the impact of problem assets, such as past-due loans, on the bank's capitalization and allocated loan loss reserves.

Having extensive holdings of these kinds of assets may eventually force a bank to use capital to cover losses, diminishing its cushion of equity. It also means that there are likely to be many assets that are in non-accrual status and no longer earning interest for the bank, reducing earnings and increasing the chances of a future failure.

De Witt Bank and Trust Company scored 40 out of a possible 40 points on Bankrate's asset quality test, better than the national average of 37.49.

A handy indicator of asset quality is the percentage of problem assets a bank holds compared to its total assets. As of December 31, 2017, none of De Witt Bank and Trust Company's loans were noncurrent -- in other words, 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 known as an "allowance for loan and lease losses" to deal with problem assets . Comparing the reserve's size to the total amount of problematic loans can be a useful indicator when evaluating a bank's ability to manage troubled assets. Unfortunately, the FDIC did not provide information on De Witt Bank and Trust Company's loan loss allowance in its most recent filings.

Earnings score

How profitable a bank is has an effect on its long-term survivability. A bank can retain its earnings, expanding its capital cushion, or use them to address problematic loans, potentially making the bank better able to withstand financial trouble. Obviously, banks that are losing money have less ability to do those things.

De Witt Bank and Trust Company received above-average marks on Bankrate's earnings test, achieving a score of 20 out of a possible 30.

Return on equity, calculated by dividing net income (profit, essentially) by the total amount of equity, is one widely used measure of a bank's earnings. De Witt Bank and Trust Company's most recent annualized quarterly return on equity was 12.08 percent, above the national average of 8.10 percent.

The bank recorded net income of $2.1 million on total equity of $18.3 million for the twelve months ended December 31, 2017. The bank had an annualized return on average assets, or ROA, of 2.17 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.