Safe and Sound

Owingsville Banking Company

Owingsville, KY
2
Star Rating
Owingsville Banking Company is an Owingsville, KY-based, FDIC-insured bank dating back to 1893. As of December 31, 2017, the bank had equity of $4.2 million on $66.1 million in assets.

With 24 full-time employees in 3 offices in KY, the bank has amassed loans and leases worth $47.2 million, including real estate loans of $42.2 million. U.S. bank customers currently have $57.3 million in deposits with the bank.

Overall, Bankrate believes that, as of December 31, 2017, Owingsville Banking Company exhibited a below-average condition, earning 2 out of 5 stars for safety and soundness. Keep reading for a breakdown of how the bank did on the three important criteria Bankrate used to evaluate U.S. banks.

WHAT IS
SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

Capital acts as a cushion against losses and as protection for depositors when a bank is experiencing financial trouble. It follows then that when it comes to measuring an a bank's financial stability, capital is valuable. When looking at safety and soundness, the more capital, the better.

On our test to measure the adequacy of a bank's capital, Owingsville Banking Company received a score of 4 out of a possible 30 points, lower than the national average of 13.13.

One way to measure this buffer is looking at a bank's Tier 1 capital ratio. Owingsville Banking Company's Tier 1 capital ratio was 15.12 percent, exceeding the 6 percent level regulators consider adequate, but below the national average of 25.65 percent. The higher the capital ratio, the better the bank will be able to stand up to economic difficulties.

Overall, Owingsville Banking Company held equity amounting to 6.40 percent of its assets, which was lower than the national average of 12.03 percent.

Asset Quality Score

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

A bank with lots of these types of assets may eventually be required to use capital to cover losses, decreasing 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, resulting in lower earnings and potentially more risk of a failure in the future.

Owingsville Banking Company finished below the national average of 37.49 on Bankrate's asset quality test, racking up 28 out of a possible 40 points .

A helpful indicator of asset quality is the percentage of problem assets a bank holds compared to its total assets. As of December 31, 2017, 2.34 percent of Owingsville Banking Company's loans were noncurrent, meaning 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 . That reserve's size can be a helpful indicator when evaluating a bank's ability to manage problem assets, especially when compared to the total amount of problematic loans. Unfortunately, the FDIC did not provide information on Owingsville Banking 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 deal with 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.

Owingsville Banking Company fell behind the national average on Bankrate's earnings test, achieving a score of 0 out of a possible 30.

One important measure of a bank's earnings is return on equity, calculated by dividing net income (essentially profit) by total equity. The most recent annualized quarterly return on equity for Owingsville Banking Company was -0.66 percent, below the national average of 8.10 percent.

For the twelve months ended December 31, 2017, the bank recorded net income of $-33,000 on total equity of $4.2 million. The bank experienced an annualized return on average assets, or ROA, of -0.05 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.