Safe and Sound

Peoples Bank of Kentucky, Inc.

Flemingsburg, KY
4
Star Rating
Flemingsburg, KY-based Peoples Bank of Kentucky, Inc. is an FDIC-insured bank started in 1906. As of December 31, 2017, the bank had equity of $34.9 million on $282.2 million in assets.

With 70 full-time employees in 8 offices in KY, the bank has amassed loans and leases worth $219.0 million, including real estate loans of $160.9 million. U.S. bank customers currently have $237.0 million in deposits with the bank.

Overall, Bankrate believes that, as of December 31, 2017, Peoples Bank of Kentucky, Inc. exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Keep reading for a breakdown of how the bank fared on the three key criteria Bankrate used to evaluate American banks.

WHAT IS
SAFE AND SOUND?

Find out

THE INSTITUTION'S SCORE

Capital Score

Capital acts as a bulwark against losses and as protection for depositors during periods of economic instability for the bank. Therefore, a bank's level of capital is a valuable measurement of an institution's financial resilience. From a safety and soundness perspective, more capital is preferred.

Peoples Bank of Kentucky, Inc. exceeded the national average of 13.13 points on our test to measure the adequacy of a bank's capital, achieving a score of 14 out of a possible 30 points.

One widely followed measure of this buffer is a bank's Tier 1 capital ratio. Peoples Bank of Kentucky, Inc.'s Tier 1 capital ratio was 14.60 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 economic difficulties.

Overall, Peoples Bank of Kentucky, Inc. held equity amounting to 12.36 percent of its assets, which exceeded the national average of 12.03 percent.

Asset Quality Score

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

Having a large number of these kinds of assets may eventually require a bank to use capital to absorb losses, cutting down on its cushion of equity. Many of those assets are also likely to be in non-accrual status and thus aren't earning interest for the bank, diminishing earnings and elevating the risk of a failure in the future.

On Bankrate's asset quality test, Peoples Bank of Kentucky, Inc. scored 36 out of a possible 40 points, below the national average of 37.49 points.

The percentage of problem assets a bank holds compared to its total assets is a useful indicator of asset quality.As of December 31, 2017, 1.63 percent of Peoples Bank of Kentucky, Inc.'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 keep a reserve known as an "allowance for loan and lease losses" to deal with troubled assets . Comparing how large that reserve is to the total amount of problematic loans can be a widely used indicator when evaluating a bank's ability to manage troubled assets. Unfortunately, the FDIC did not provide information on Peoples Bank of Kentucky, Inc.'s loan loss allowance in its most recent filings.

Earnings score

A bank's ability to earn money affects its safety and soundness. A bank can retain its earnings, expanding its capital buffer, or use them to deal with problematic loans, likely making the bank more resilient in times of trouble. Conversely, losses lessen a bank's ability to do those things.

On Bankrate's earnings test, Peoples Bank of Kentucky, Inc. scored 16 out of a possible 30, exceeding the national average of 15.12.

One key measure of a bank's earnings is return on equity, or net income (profit, essentially) divided by total equity. The most recent annualized quarterly return on equity for Peoples Bank of Kentucky, Inc. was 7.55 percent, below the national average of 8.10 percent.

The bank earned net income of $2.6 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 0.92 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.