Safe and Sound

The Peoples Bank

Eatonton, GA
1
Star Rating
Eatonton, GA-based The Peoples Bank is an FDIC-insured bank started in 1943. As of December 31, 2017, the bank held equity of $5.6 million on assets of $122.4 million.

Thanks to the work of 38 full-time employees in 3 offices in GA, the bank holds loans and leases worth $74.1 million, including $69.0 million worth of real estate loans. U.S. bank customers currently have $110.8 million in deposits with the bank.

Overall, Bankrate believes that, as of December 31, 2017, The Peoples Bank exhibited a significantly below-average condition, earning 1 out of 5 stars for safety and soundness. Here's a breakdown of how the bank fared on the three important criteria Bankrate used to grade U.S. banks.

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THE INSTITUTION'S SCORE

Capital Score

Capital works as a bulwark against losses and provides protection for account holders when a bank is struggling financially. It follows then that when it comes to measuring an a bank's financial strength, capital is valuable. When it comes to safety and soundness, the more capital, the better.

On our test to measure the adequacy of a bank's capital, The Peoples Bank received a score of 0 out of a possible 30 points, less than the national average of 13.13.

A bank's Tier 1 capital ratio is an essential measure of this buffer. The Peoples Bank's Tier 1 capital ratio was 8.22 percent, exceeding the 6 percent level considered adequate by regulators, but less than the national average of 25.65 percent. A higher capital ratio suggests the bank will be better able to stand up to economic challenges.

Overall, The Peoples Bank held equity amounting to 4.58 percent of its assets, which was lower than the national average of 12.03 percent.

Asset Quality Score

This test is intended to estimate how the bank's capitalization and allocated loan loss reserves could be affected by problem assets, such as past-due loans.

Having lots of these kinds of assets could eventually force a bank to use capital to absorb losses, shrinking its cushion of equity. 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, resulting in reduced earnings and potentially more risk of a future failure.

On Bankrate's test of asset quality, The Peoples Bank scored 16 out of a possible 40 points, failing to reach 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, 2.47 percent of The Peoples 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 keep a reserve known as an "allowance for loan and lease losses" to deal with problem assets . Comparing the size of that reserve to the total amount of problematic loans can be a handy indicator when evaluating a bank's ability to manage troubled assets. Unfortunately, the FDIC did not provide information on The Peoples Bank'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, increasing its capital buffer, or put them to work addressing problematic loans, potentially making the bank more resilient in tough times. Obviously, banks that are losing money have less ability to do those things.

The Peoples Bank fell behind the national average on Bankrate's earnings test, achieving a score of 0 out of a possible 30.

One widely used measure of a bank's earnings is return on equity, or net income (essentially profit) divided by total equity. The Peoples Bank's most recent annualized quarterly return on equity was -0.94 percent, below the national average of 8.10 percent.

The bank recorded net income of $-55,000 on total equity of $5.6 million for the twelve months ended December 31, 2017. The bank had an annualized return on average assets, or ROA, of -0.04 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.