Safe and Sound

Hancock Bank & Trust Company

Hawesville, KY
4
Star Rating
Hancock Bank & Trust Company is an FDIC-insured bank started in 1888 and currently based in Hawesville, KY. Regulatory filings show the bank having equity of $31.6 million on $277.4 million in assets, as of December 31, 2017.

U.S. bank customers have $232.7 million on deposit at 6 offices in KY run by 80 full-time employees. With that footprint, the bank holds loans and leases worth $213.8 million, including real estate loans of $186.6 million.

Overall, Bankrate believes that, as of December 31, 2017, Hancock Bank & Trust Company exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Here's an analysis of how the bank did on the three key criteria Bankrate used to score U.S. banks.

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SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

Capital acts as a bulwark against losses and affords protection for depositors when a bank is struggling financially. It follows then that a bank's level of capital is a key measurement of a bank's financial resilience. When it comes to safety and soundness, the higher the capital, the better.

On our test to measure the adequacy of a bank's capital, Hancock Bank & Trust Company received a score of 12 out of a possible 30 points, falling short of the national average of 13.13.

One way to measure this buffer is looking at a bank's Tier 1 capital ratio. Hancock Bank & Trust Company's Tier 1 capital ratio was 14.43 percent, higher than the 6 percent level regulators consider adequate, but lower than the national average of 25.65 percent. The higher the capital ratio, the better the bank will be able to weather economic difficulties.

Overall, Hancock Bank & Trust Company held equity amounting to 11.39 percent of its assets, which was lower than 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.

A bank with extensive holdings of these kinds of assets may eventually be forced to use capital to absorb losses, cutting down on 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, diminishing earnings and elevating the risk of a failure in the future.

Hancock Bank & Trust Company scored 40 out of a possible 40 points on Bankrate's asset quality test, beating out the national average of 37.49.

A widely used indicator of asset quality is the percentage of problem assets a bank holds compared to its total assets. As of December 31, 2017, 0.19 percent of Hancock Bank & Trust Company'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 to deal with problem assets known as an "allowance for loan and lease losses." Comparing the reserve's size to the total amount of problem loans can be a helpful indicator when evaluating a bank's ability to manage troubled assets. Unfortunately, the FDIC did not provide information on Hancock Bank & Trust Company's loan loss allowance in its most recent filings.

Earnings score

A bank's earnings performance affects its long-term survivability. A bank can retain its earnings, boosting its capital cushion, or use them to address problematic loans, potentially making the bank more resilient in tough times. Obviously, banks that are losing money have less ability to do those things.

On Bankrate's test of earnings, Hancock Bank & Trust Company scored 12 out of a possible 30, coming in below the national average of 15.12.

Return on equity, calculated by dividing net income (essentially, profit) by total equity, is one key measure of a bank's earnings. Hancock Bank & Trust Company's most recent annualized quarterly return on equity was 5.30 percent, below the national average of 8.10 percent.

The bank earned net income of $1.7 million on total equity of $31.6 million for the twelve months ended December 31, 2017. The bank reported an annualized return on average assets, or ROA, of 0.59 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.