Safe and Sound

Peoples Bank of Greensboro

Greensboro, AL
5
Star Rating
Started in 1904, Peoples Bank of Greensboro is an FDIC-insured bank based in Greensboro, AL. As of December 31, 2017, the bank had equity of $7.5 million on assets of $91.2 million.

With 20 full-time employees, the bank holds loans and leases worth $45.7 million, including real estate loans of $32.9 million. U.S. bank customers currently have $75.6 million in deposits with the bank.

Overall, Bankrate believes that, as of December 31, 2017, Peoples Bank of Greensboro 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 score U.S. banks on safety and soundness.

WHAT IS
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 experiencing economic trouble. Therefore, a bank's level of capital is an essential measurement of an institution's financial fortitude. When looking at safety and soundness, the higher the capital, the better.

Peoples Bank of Greensboro received a score of 8 out of a possible 30 points on our test to measure capital adequacy, failing to reach the national average of 13.13.

One essential measure of this buffer is a bank's Tier 1 capital ratio. Peoples Bank of Greensboro's Tier 1 capital ratio was 15.82 percent, above the 6 percent level considered adequate by regulators, but below the national average of 25.65 percent. A higher capital ratio means the bank will be better able to weather economic headwinds.

Overall, Peoples Bank of Greensboro held equity amounting to 8.26 percent of its assets, which was lower than the national average of 12.03 percent.

Asset Quality Score

This test is intended to try to understand how the bank's reserves set aside to cover loan losses, as well as overall capitalization, could be affected by problem assets, such as past-due loans.

A bank with a large number of these kinds of assets may eventually have to use capital to cover losses, reducing its equity buffer. It also means that there are likely to be many assets that are in non-accrual status and thus aren't earning interest for the bank, pushing down earnings and elevating the risk of a future failure.

Peoples Bank of Greensboro scored 40 out of a possible 40 points on Bankrate's test of asset quality, exceeding the national average of 37.49.

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, 0.47 percent of Peoples Bank of Greensboro'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 handle troubled 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 problematic loans. Unfortunately, the FDIC did not provide information on Peoples Bank of Greensboro's loan loss allowance in its most recent filings.

Earnings score

How profitable a bank is affects its long-term survivability. Earnings can be retained by the bank, boosting its capital buffer, or be used to deal with problematic loans, likely making the bank better prepared to withstand economic shocks. However, banks that are losing money are less able to do those things.

On Bankrate's earnings test, Peoples Bank of Greensboro scored 26 out of a possible 30, beating out the national average of 15.12.

Return on equity, calculated by dividing net income (essentially, profit) by the total amount of equity, is one important measure of a bank's earnings. The most recent annualized quarterly return on equity for Peoples Bank of Greensboro was 15.97 percent, above the national average of 8.10 percent.

The bank recorded net income of $1.2 million on total equity of $7.5 million for the twelve months ended December 31, 2017. The bank had an annualized return on average assets, or ROA, of 1.31 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.