Safe and Sound

Citizens & Northern Bank

Wellsboro, PA
5
Star Rating
Wellsboro, PA-based Citizens & Northern Bank is an FDIC-insured bank founded in 1864. As of June 30, 2017, the bank had equity of $168.5 million on $1,228,726,000 in assets.

Thanks to the efforts of 290 full-time employees in 26 offices in multiple states, the bank holds loans and leases worth $772.8 million, including real estate loans of $617.0 million. The bank currently holds $1.00 billion in deposits from U.S. customers.

Overall, Bankrate believes that, as of June 30, 2017, Citizens & Northern Bank exhibited a superior condition, earning a full 5 stars for safety and soundness. Here's an analysis of how the bank did on the three key criteria Bankrate used to score U.S. banks on safety and soundness.

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THE INSTITUTION'S SCORE

Capital Score

Capital works as a cushion against losses and provides protection for accountholders when a bank is struggling financially. Therefore, a bank's level of capital is a useful measurement of a bank's financial strength. When looking at safety and soundness, more capital is preferred.
On our test to measure capital adequacy, Citizens & Northern Bank scored 16 out of a possible 30 points, better than the national average of 13.38.

One way to measure this buffer is looking at a bank's Tier 1 capital ratio. Citizens & Northern Bank's Tier 1 capital ratio was 19.84 percent, higher than the 6 percent level regulators consider adequate, but less than the national average of 25.16 percent. A higher capital ratio means the bank will be better able to weather economic headwinds.

Overall, Citizens & Northern Bank held equity amounting to 13.71 percent of its assets, which exceeded the national average of 12.10 percent.

Asset Quality Score

Bankrate uses this test to estimate the impact of problem 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 could eventually force a bank to use capital to absorb losses, reducing its buffer of equity. It also means that there are likely to be many assets that are in non-accrual status and no longer earning money, pushing down earnings and elevating the risk of a future failure.

On Bankrate's asset quality test, Citizens & Northern Bank scored 36 out of a possible 40 points, failing to reach the national average of 37.62 points.

The percentage of problem assets a bank holds compared to its total assets is a handy indicator of asset quality.As of June 30, 2017, 1.82 percent of Citizens & Northern Bank'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 1.04 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 at-risk loans. Unfortunately, the FDIC did not provide information on Citizens & Northern Bank's loan loss allowance in its most recent filings.

Earnings score

A bank's profitability has an effect on its long-term survivability. Earnings may be retained by the bank, expanding its capital buffer, or be used to address problematic loans, likely making the bank better able to withstand economic trouble. Conversely, losses reduce a bank's ability to do those things.

Citizens & Northern Bank scored 18 out of a possible 30 on Bankrate's earnings test, beating out the national average of 16.52.

One important way to measure a bank's earnings is return on equity, or net income (profit, basically) divided by total equity. Citizens & Northern Bank's most recent annualized quarterly return on equity was 9.00 percent, below the national average of 9.28 percent.

The bank recorded net income of $7.5 million on total equity of $168.5 million for the twelve months ended June 30, 2017. The bank reported an annualized return on average assets, or ROA, of 1.23 percent, above the 1 percent deemed satisfactory in accordance with industry standards, and above the average for U.S. banks of 1.14 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.