Safe and Sound

People's Bank and Trust Company of Pickett County

Byrdstown, TN
4
Star Rating
People's Bank and Trust Company of Pickett County is a Byrdstown, TN-based, FDIC-insured bank that opened its doors in 1978. Regulatory filings show the bank having equity of $14.9 million on assets of $121.7 million, as of December 31, 2017.

With 34 full-time employees, the bank currently holds loans and leases worth $85.0 million, including real estate loans of $48.7 million. U.S. bank customers currently have $106.0 million in deposits with the bank.

Overall, Bankrate believes that, as of December 31, 2017, People's Bank and Trust Company of Pickett County exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Keep reading for a look at how the bank did on the three key criteria Bankrate used to score American 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 as protection for account holders when a bank is struggling financially. Therefore, a bank's level of capital is a valuable measurement of a bank's financial strength. When it comes to safety and soundness, more capital is better.

On our test to measure the adequacy of a bank's capital, People's Bank and Trust Company of Pickett County scored 16 out of a possible 30 points, beating out the national average of 13.13.

One widely followed measure of this buffer is a bank's Tier 1 capital ratio. People's Bank and Trust Company of Pickett County's Tier 1 capital ratio was 17.94 percent, exceeding the 6 percent level regulators consider adequate, but under the national average of 25.65 percent. The higher the capital ratio, the better the bank will be able to stand up to financial downturns.

Overall, People's Bank and Trust Company of Pickett County held equity amounting to 12.22 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 reserves set aside to cover loan losses, as well as overall capitalization, could be affected by problem assets, such as unpaid mortgages.

A bank with a large number of these types of assets may eventually be required to use capital to absorb losses, shrinking its equity cushion. It also means that there are likely to be many assets that are in non-accrual status and thus aren't earning money, resulting in diminished earnings and potentially more risk of a future failure.

On Bankrate's asset quality test, People's Bank and Trust Company of Pickett County scored 32 out of a possible 40 points, lower than the national average of 37.49 points.

A handy indicator of asset quality is the percentage of problem assets a bank holds compared to its total assets. As of December 31, 2017, 3.14 percent of People's Bank and Trust Company of Pickett County'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 keep a reserve known as an "allowance for loan and lease losses" to deal with problem assets . That reserve's size 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 People's Bank and Trust Company of Pickett County's loan loss allowance in its most recent filings.

Earnings score

How profitable a bank is has an effect on its long-term survivability. A bank can retain its earnings, increasing its capital cushion, or use them 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 test of earnings, People's Bank and Trust Company of Pickett County scored 18 out of a possible 30, beating out the national average of 15.12.

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 People's Bank and Trust Company of Pickett County was 8.49 percent, above the national average of 8.10 percent.

The bank earned net income of $1.2 million on total equity of $14.9 million for the twelve months ended December 31, 2017. The bank had an annualized return on average assets, or ROA, of 1.05 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.