Safe and Sound

Peoples Bank & Trust Company

Owenton, KY
5
Star Rating
Started in 1902, Peoples Bank & Trust Company is an FDIC-insured bank headquartered in Owenton, KY. Regulatory filings show the bank having equity of $7.8 million on $57.6 million in assets, as of December 31, 2017.

Thanks to the efforts of 16 full-time employees, the bank holds loans and leases worth $35.0 million, $30.7 million of which are for real estate. The bank currently holds $47.1 million in deposits from U.S. customers.

Overall, Bankrate believes that, as of December 31, 2017, Peoples Bank & Trust Company exhibited a superior condition, earning a full 5 stars for safety and soundness. Here's a look at how the bank did on the three important criteria Bankrate used to evaluate American banks on safety and soundness.

WHAT IS
SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

Capital works as a cushion against losses and provides protection for depositors when a bank is struggling financially. Therefore, when it comes to measuring an a bank's financial resilience, capital is important. When looking at safety and soundness, the more capital, the better.

Peoples Bank & Trust Company exceeded the national average of 13.13 points on our test to measure capital adequacy, scoring 18 out of a possible 30 points.

A bank's Tier 1 capital ratio is a widely used measure of this buffer. Peoples Bank & Trust Company's Tier 1 capital ratio was 22.00 percent, above the 6 percent level considered adequate by regulators, but under the national average of 25.65 percent. A higher capital ratio means the bank will be better able to stand up to financial challenges.

Overall, Peoples Bank & Trust Company held equity amounting to 13.61 percent of its assets, which exceeded the national average of 12.03 percent.

Asset Quality Score

Bankrate uses this test to estimate the impact of problem assets, such as unpaid mortgages, on the bank's capitalization and allocated loan loss reserves.

A bank with extensive holdings of these kinds of assets could eventually have to use capital to cover 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, pushing down earnings and elevating the chances of a failure in the future.

On Bankrate's test of asset quality, Peoples Bank & Trust Company scored 36 out of a possible 40 points, coming in 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, 2.37 percent of Peoples Bank & Trust Company'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 maintain a reserve to handle problem assets known as an "allowance for loan and lease losses." Comparing how large that reserve is to the total amount of at-risk loans can be a useful indicator when evaluating a bank's ability to manage problem assets. Unfortunately, the FDIC did not provide information on Peoples Bank & Trust Company's loan loss allowance in its most recent filings.

Earnings score

A bank's ability to earn money has an effect on its safety and soundness. A bank can retain its earnings, boosting its capital buffer, or put them to work addressing problematic loans, likely making the bank more resilient in times of trouble. However, banks that are losing money are less able to do those things.

On Bankrate's earnings test, Peoples Bank & Trust Company scored 20 out of a possible 30, beating out the national average of 15.12.

One key measure of a bank's earnings is return on equity, calculated by dividing net income (profit, essentially) by the total amount of equity. Peoples Bank & Trust Company's most recent annualized quarterly return on equity was 10.49 percent, above the national average of 8.10 percent.

The bank recorded net income of $794,000 on total equity of $7.8 million for the twelve months ended December 31, 2017. The bank had an annualized return on average assets, or ROA, of 1.40 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.