Safe and Sound

Town & Country Bank and Trust Company

Bardstown, KY
3
Star Rating
Town & Country Bank and Trust Company is a Bardstown, KY-based, FDIC-insured bank started in 1907. The bank holds equity of $35.6 million on assets of $306.6 million, according to December 31, 2017, regulatory filings.

U.S. bank customers have $269.6 million on deposit at 6 offices in KY run by 86 full-time employees. With that footprint, the bank holds loans and leases worth $176.6 million, $155.7 million of which are for real estate.

Overall, Bankrate believes that, as of December 31, 2017, Town & Country Bank and Trust Company exhibited a generally satisfactory condition, earning 3 out of 5 stars for safety and soundness. Keep reading for a look at how the bank did on the three major criteria Bankrate used to evaluate U.S. banks.

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THE INSTITUTION'S SCORE

Capital Score

Capital is a key measurement of a bank's financial strength. It works as a cushion against losses and as protection for depositors during periods of financial trouble for the bank. From a safety and soundness perspective, the higher the capital, the better.

On our test to measure the adequacy of a bank's capital, Town & Country Bank and Trust Company achieved a score of 14 out of a possible 30 points, exceeding the national average of 13.13.

A bank's Tier 1 capital ratio is a widely followed measure of this buffer. Town & Country Bank and Trust Company's Tier 1 capital ratio was 16.57 percent, above the 6 percent level considered adequate by regulators, 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 difficulties.

Overall, Town & Country Bank and Trust Company held equity amounting to 11.62 percent of its assets, which was lower than 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 mortgages, on the bank's reserves set aside to cover loan losses, as well as overall capitalization.

Having extensive holdings of these kinds of assets suggests a bank could 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, reducing earnings and increasing the risk of a future failure.

Town & Country Bank and Trust Company finished below the national average of 37.49 on Bankrate's asset quality test, racking up 36 out of a possible 40 points .

A helpful indicator of asset quality is the percentage of problem assets a bank holds compared to its total assets. As of December 31, 2017, 0.67 percent of Town & Country Bank and Trust Company's loans were noncurrent, meaning 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 keep a reserve to deal with problem assets known as an "allowance for loan and lease losses." How large that reserve is can be a helpful indicator when evaluating a bank's ability to manage problem assets, especially when compared to the total amount of problematic loans. Unfortunately, the FDIC did not provide information on Town & Country Bank and Trust Company's loan loss allowance in its most recent filings.

Earnings score

How profitable a bank is has an effect on its long-term survivability. A bank can retain its earnings, boosting its capital buffer, or use them to address problematic loans, likely making the bank better prepared to withstand economic shocks. Banks that are losing money, however, are less able to do those things.

Town & Country Bank and Trust Company scored 4 out of a possible 30 on Bankrate's earnings test, less than 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 total equity. The most recent annualized quarterly return on equity for Town & Country Bank and Trust Company was 1.73 percent, below the national average of 8.10 percent.

For the twelve months ended December 31, 2017, the bank earned net income of $641,000 on total equity of $35.6 million. The bank reported an annualized return on average assets, or ROA, of 0.21 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.