Safe and Sound

Jackson County Bank

Mc Kee, KY
5
Star Rating
Mc Kee, KY-based Jackson County Bank is an FDIC-insured bank started in 1904. As of December 31, 2017, the bank had equity of $34.9 million on $125.5 million in assets.

U.S. bank customers have $86.5 million on deposit at 3 offices in KY run by 38 full-time employees. With that footprint, the bank currently holds loans and leases worth $64.4 million, $48.0 million of which are for real estate.

Overall, Bankrate believes that, as of December 31, 2017, Jackson County Bank exhibited a superior condition, earning a full 5 stars for safety and soundness. Here's a breakdown of how the bank fared on the three important criteria Bankrate used to grade 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 provides protection for depositors during times of financial trouble for the bank. Therefore, when it comes to measuring an an institution's financial stability, capital is essential. When looking at safety and soundness, the higher the capital, the better.

Jackson County Bank exceeded the national average of 13.13 points on our test to measure the adequacy of a bank's capital, racking up 30 out of a possible 30 points.

One way to measure this buffer is looking at a bank's Tier 1 capital ratio. Jackson County Bank's Tier 1 capital ratio was 47.86 percent, higher than the 6 percent level regulators consider adequate, 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 economic challenges.

Overall, Jackson County Bank held equity amounting to 27.80 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 unpaid loans, on the bank's reserves set aside to cover loan losses, as well as overall capitalization.

Having extensive holdings of these kinds of assets means a bank could have to use capital to absorb losses, shrinking its cushion of equity. Many of those assets are also likely to be in non-accrual status and no longer earning interest for the bank, pushing down earnings and elevating the chances of a failure in the future.

Jackson County Bank did better than the national average of 37.49 on Bankrate's test of asset quality, racking up 40 out of a possible 40 points .

The percentage of problem assets a bank holds compared to its total assets is a helpful indicator of asset quality. As of December 31, 2017, 1.01 percent of Jackson County Bank's loans were noncurrent, meaning they were more than 90 days past due or were in non-accrual status. That's exactly equal to the national average.

Banks keep a reserve to deal with troubled assets known as an "allowance for loan and lease losses." Comparing how large that reserve is to the total amount of problematic loans can be a handy indicator when evaluating a bank's ability to manage troubled assets. Unfortunately, the FDIC did not provide information on Jackson County Bank's loan loss allowance in its most recent filings.

Earnings score

How profitable a bank is affects its safety and soundness. Earnings may be retained by the bank, boosting its capital buffer, or be used to deal with problematic loans, likely making the bank more resilient in times of trouble. Banks that are losing money, however, have less ability to do those things.

On Bankrate's earnings test, Jackson County Bank scored 8 out of a possible 30, failing to reach the national average of 15.12.

Return on equity, calculated by dividing net income (profit, basically) by the total amount of equity, is one important way to measure a bank's earnings. Jackson County Bank's most recent annualized quarterly return on equity was 3.69 percent, below the national average of 8.10 percent.

The bank earned net income of $1.3 million on total equity of $34.9 million for the twelve months ended December 31, 2017. The bank had an annualized return on average assets, or ROA, of 1.02 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.