Safe and Sound

Hart County Bank and Trust Company

Munfordville, KY
5
Star Rating
Hart County Bank and Trust Company is an FDIC-insured bank started in 1890 and currently based in Munfordville, KY. As of December 31, 2017, the bank held equity of $5.7 million on $26.9 million in assets.

Thanks to the efforts of 8 full-time employees, the bank holds loans and leases worth $15.2 million, including $10.3 million worth of real estate loans. U.S. bank customers currently have $21.1 million in deposits with the bank.

Overall, Bankrate believes that, as of December 31, 2017, Hart County Bank and Trust Company exhibited a superior condition, earning a full 5 stars for safety and soundness. Keep reading for a look at how the bank fared on the three major criteria Bankrate used to evaluate U.S. banks on safety and soundness.

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THE INSTITUTION'S SCORE

Capital Score

Capital works as a bulwark against losses and as protection for account holders when a bank is experiencing economic trouble. It follows then that when it comes to measuring an an institution's financial stability, capital is important. From a safety and soundness perspective, more capital is better.

On our test to measure the adequacy of a bank's capital, Hart County Bank and Trust Company achieved a score of 30 out of a possible 30 points, exceeding the national average of 13.13.

A bank's Tier 1 capital ratio is an important measure of this buffer. Hart County Bank and Trust Company's Tier 1 capital ratio was 26.49 percent, exceeding the 6 percent level considered adequate by regulators, and higher than the national average of 25.65 percent. The higher the capital ratio, the better the bank will be able to stand up to financial difficulties.

Overall, Hart County Bank and Trust Company held equity amounting to 21.25 percent of its assets, which exceeded the national average of 12.03 percent.

Asset Quality Score

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

Having large numbers of these kinds of assets may eventually require a bank to use capital to cover losses, shrinking its buffer of equity. Many of those assets are also likely to be in non-accrual status and thus aren't earning interest for the bank, decreasing earnings and elevating the chances of a failure in the future.

On Bankrate's asset quality test, Hart County Bank and Trust Company scored 40 out of a possible 40 points, beating the national average of 37.49 points.

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, none of Hart County 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 to deal with problem assets known as an "allowance for loan and lease losses." How large that reserve is can be a widely used indicator when evaluating a bank's ability to manage problem assets, especially when compared to the total amount of at-risk loans. Unfortunately, the FDIC did not provide information on Hart County Bank and Trust Company's loan loss allowance in its most recent filings.

Earnings score

A bank's profitability has an effect on its long-term survivability. Earnings may be retained by the bank, expanding its capital cushion, or be used to address problematic loans, likely making the bank more resilient in times of trouble. Losses, on the other hand, take away from a bank's ability to do those things.

On Bankrate's earnings test, Hart County Bank and Trust Company scored 8 out of a possible 30, falling short of the national average of 15.12.

One widely used way to measure a bank's earnings is return on equity, or net income (essentially profit) divided by total equity. Hart County Bank and Trust Company's most recent annualized quarterly return on equity was 3.58 percent, below the national average of 8.10 percent.

For the twelve months ended December 31, 2017, the bank reported net income of $208,000 on total equity of $5.7 million. The bank had an annualized return on average assets, or ROA, of 0.75 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.