Safe and Sound

PEOPLES BANK OF MIDDLE TENNESSEE

Shelbyville, TN
4
Star Rating
Shelbyville, TN-based PEOPLES BANK OF MIDDLE TENNESSEE is an FDIC-insured bank founded in 2000. As of December 31, 2017, the bank held equity of $16.0 million on $143.2 million in assets.

Thanks to the work of 24 full-time employees, the bank holds loans and leases worth $105.4 million, $89.7 million of which are for real estate. The bank currently holds $125.8 million in deposits from U.S. customers.

Overall, Bankrate believes that, as of December 31, 2017, PEOPLES BANK OF MIDDLE TENNESSEE 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 evaluate American banks.

WHAT IS
SAFE AND SOUND?

Find out

THE INSTITUTION'S SCORE

Capital Score

When it comes to measuring an an institution's financial strength, capital is essential. It acts as a cushion against losses and affords protection for accountholders during times of financial trouble for the bank. When looking at safety and soundness, more capital is preferred.

PEOPLES BANK OF MIDDLE TENNESSEE racked up 14 out of a possible 30 points on our test to measure the adequacy of a bank's capital, beating out the national average of 13.13.

One important measure of this buffer is a bank's Tier 1 capital ratio. PEOPLES BANK OF MIDDLE TENNESSEE's Tier 1 capital ratio was 14.47 percent, above the 6 percent level considered adequate by regulators, but lower than the national average of 25.65 percent. A higher capital ratio means the bank will be better able to weather financial downturns.

Overall, PEOPLES BANK OF MIDDLE TENNESSEE held equity amounting to 11.17 percent of its assets, which was lower than the national average of 12.03 percent.

Asset Quality Score

This test's purpose is to try to understand how the bank's reserves set aside to cover loan losses, as well as overall capitalization, could be affected by troubled assets, such as unpaid loans.

A bank with large numbers of these kinds of assets may eventually have 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 money, resulting in lower earnings and potentially more risk of a failure in the future.

On Bankrate's test of asset quality, PEOPLES BANK OF MIDDLE TENNESSEE scored 40 out of a possible 40 points, exceeding the national average of 37.49 points.

The percentage of problem assets a bank holds compared to its total assets is a widely used indicator of asset quality.As of December 31, 2017, 0.74 percent of PEOPLES BANK OF MIDDLE TENNESSEE'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 known as an "allowance for loan and lease losses" to deal with problem assets . How large that reserve is can be a handy indicator when evaluating a bank's ability to manage troubled assets, especially when compared to the total amount of problematic loans. Unfortunately, the FDIC did not provide information on PEOPLES BANK OF MIDDLE TENNESSEE's loan loss allowance in its most recent filings.

Earnings score

How profitable a bank is affects its long-term survivability. A bank can retain its earnings, giving a boost to its capital cushion, or put them to work addressing problematic loans, likely making the bank more resilient in times of trouble. Losses, on the other hand, reduce a bank's ability to do those things.

PEOPLES BANK OF MIDDLE TENNESSEE scored 14 out of a possible 30 on Bankrate's test of earnings, coming in below the national average of 15.12.

One widely used measure of a bank's earnings is return on equity, calculated by dividing net income (profit, essentially) by total equity. The most recent annualized quarterly return on equity for PEOPLES BANK OF MIDDLE TENNESSEE was 6.79 percent, below the national average of 8.10 percent.

For the twelve months ended December 31, 2017, the bank recorded net income of $1.1 million on total equity of $16.0 million. The bank had an annualized return on average assets, or ROA, of 0.74 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.