Safe and Sound

First & Peoples Bank and Trust Company

Russell, KY
5
Star Rating
First & Peoples Bank and Trust Company is an FDIC-insured bank founded in 1932 and currently headquartered in Russell, KY. The bank holds equity of $34.8 million on $202.9 million in assets, according to December 31, 2017, regulatory filings.

Thanks to the work of 60 full-time employees in 6 offices in KY, the bank currently holds loans and leases worth $93.1 million, including $43.6 million worth of real estate loans. The bank currently holds $163.4 million in deposits from U.S. customers.

Overall, Bankrate believes that, as of December 31, 2017, First & Peoples Bank and Trust Company exhibited a superior condition, earning a full 5 stars for safety and soundness. Here's a look at how the bank fared on the three key criteria Bankrate used to score American banks on safety and soundness.

WHAT IS
SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

Capital works as a buffer against losses and affords protection for depositors when a bank is experiencing financial trouble. Therefore, when it comes to measuring an an institution's financial stability, capital is valuable. From a safety and soundness perspective, the higher the capital, the better.

First & Peoples Bank and Trust Company exceeded 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 a widely used measure of this buffer. First & Peoples Bank and Trust Company's Tier 1 capital ratio was 38.06 percent, exceeding the 6 percent level considered adequate by regulators, and higher than the national average of 25.65 percent. A higher capital ratio means the bank will be better able to weather financial difficulties.

Overall, First & Peoples Bank and Trust Company held equity amounting to 17.17 percent of its assets, which exceeded the national average of 12.03 percent.

Asset Quality Score

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

Having large numbers of these kinds of assets means a bank could eventually have to use capital to absorb losses, shrinking its buffer of equity. It also means that there are likely to be many assets that are in non-accrual status and thus aren't earning interest for the bank, decreasing earnings and increasing the risk of a failure in the future.

First & Peoples Bank and Trust Company did better than the national average of 37.49 on Bankrate's asset quality test, racking up 40 out of a possible 40 points .

The percentage of problem assets a bank holds compared to its total assets is a useful indicator of asset quality.As of December 31, 2017, 1.06 percent of First & Peoples 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 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 . Comparing how large that reserve is to the total amount of problem loans can be a useful indicator when evaluating a bank's ability to manage problem assets. Unfortunately, the FDIC did not provide information on First & Peoples Bank and Trust Company's loan loss allowance in its most recent filings.

Earnings score

How profitable a bank is affects its safety and soundness. A bank can retain its earnings, boosting its capital cushion, or use them to address problematic loans, likely making the bank better prepared to withstand financial trouble. Losses, on the other hand, reduce a bank's ability to do those things.

First & Peoples Bank and Trust Company received below-average marks on Bankrate's earnings test, achieving a score of 6 out of a possible 30.

Return on equity, calculated by dividing net income (profit, essentially) by total equity, is one important measure of a bank's earnings. First & Peoples Bank and Trust Company's most recent annualized quarterly return on equity was 2.09 percent, below the national average of 8.10 percent.

The bank recorded net income of $726,000 on total equity of $34.8 million for the twelve months ended December 31, 2017. The bank experienced an annualized return on average assets, or ROA, of 0.36 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.