Safe and Sound

The Citizens Bank

Hickman, KY
5
Star Rating
The Citizens Bank is an FDIC-insured bank started in 1930 and currently headquartered in Hickman, KY. Regulatory filings show the bank having equity of $17.1 million on assets of $117.1 million, as of December 31, 2017.

With 30 full-time employees in 2 offices in KY, the bank currently holds loans and leases worth $80.0 million, including real estate loans of $66.4 million. U.S. bank customers currently have $95.3 million in deposits with the bank.

Overall, Bankrate believes that, as of December 31, 2017, The Citizens Bank 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 major criteria Bankrate used to evaluate American banks on safety and soundness.

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THE INSTITUTION'S SCORE

Capital Score

Capital is a useful measurement of a bank's financial strength. It acts as a buffer against losses and as protection for accountholders when a bank is experiencing financial instability. When it comes to safety and soundness, the more capital, the better.

The Citizens Bank did better than the national average of 13.13 points on our test to measure capital adequacy, scoring 20 out of a possible 30 points.

One way to measure this buffer is looking at a bank's Tier 1 capital ratio. The Citizens Bank's Tier 1 capital ratio was 20.42 percent, higher than the 6 percent level regulators consider adequate, but less than 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, The Citizens Bank held equity amounting to 14.58 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 loan loss reserves and overall capitalization could be affected by troubled assets, such as past-due mortgages.

Having a large number of these kinds of assets suggests a bank could eventually have to use capital to absorb losses, shrinking its equity cushion. Many of those assets are also likely to be in non-accrual status and thus aren't earning money, decreasing earnings and increasing the chances of a future failure.

On Bankrate's test of asset quality, The Citizens Bank scored 36 out of a possible 40 points, falling short of 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, 2.64 percent of The Citizens Bank'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 maintain a reserve to deal with troubled assets known as an "allowance for loan and lease losses." That reserve's size can be a useful 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 The Citizens Bank's loan loss allowance in its most recent filings.

Earnings score

A bank's earnings performance affects its safety and soundness. A bank can retain its earnings, boosting its capital cushion, or use them to address problematic loans, potentially making the bank more resilient in times of trouble. Conversely, losses reduce a bank's ability to do those things.

The Citizens Bank scored 16 out of a possible 30 on Bankrate's test of earnings, beating out the national average of 15.12.

One key measure of a bank's earnings is return on equity, or net income (profit, basically) divided by the total amount of equity. The most recent annualized quarterly return on equity for The Citizens Bank was 7.75 percent, below the national average of 8.10 percent.

For the twelve months ended December 31, 2017, the bank recorded net income of $1.3 million on total equity of $17.1 million. The bank had an annualized return on average assets, or ROA, of 1.08 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.