Safe and Sound

City National Bank of New Jersey

Newark, NJ
NR
Star Rating
City National Bank of New Jersey is an FDIC-insured bank founded in 1973 and currently headquartered in Newark, NJ. Regulatory filings show the bank having equity of $10.9 million on assets of $219.9 million, as of June 30, 2017.

U.S. bank customers have $196.6 million on deposit at 4 offices in multiple states run by 78 full-time employees. With that footprint, the bank has amassed loans and leases worth $118.3 million, $107.2 million of which are for real estate.

Overall, Bankrate did not have enough information on this institution to give it a star rating. Here's a look at how the bank did on the three key criteria Bankrate used to grade American banks.

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SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

Capital works as a cushion against losses and affords protection for accountholders when a bank is experiencing economic trouble. 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 capital adequacy, City National Bank of New Jersey received a score of 0 out of a possible 30 points, falling short of the national average of 13.38.

A bank's Tier 1 capital ratio is an important measure of this buffer. City National Bank of New Jersey's Tier 1 capital ratio was 8.88 percent, above the 6 percent level considered adequate by regulators, but under the national average of 25.16 percent. The higher the capital ratio, the better the bank will be able to stand up to financial headwinds.

Overall, City National Bank of New Jersey held equity amounting to 4.96 percent of its assets, which was lower than the national average of 12.10 percent.

Asset Quality Score

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

Having a large number of these types of assets may eventually force a bank to use capital to absorb losses, shrinking its cushion of equity. Many of those assets are also likely to be in non-accrual status and no longer earning interest for the bank, resulting in reduced earnings and potentially more risk of a future failure.

City National Bank of New Jersey fell short of the national average of 37.62 on Bankrate's test of asset quality, racking up 16 out of a possible 40 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, 3.47 percent of City National Bank of New Jersey'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 1.04 percent.

Banks maintain a reserve known as an "allowance for loan and lease losses" to deal with problem assets . How large that reserve is can be a helpful indicator when evaluating a bank's ability to manage troubled assets, especially when compared to the total amount of problematic loans. Unfortunately, the FDIC did not provide information on City National Bank of New Jersey's loan loss allowance in its most recent filings.

Earnings score

A bank's ability to earn money affects its safety and soundness. Earnings can be retained by the bank, giving a boost to its capital cushion, or be used to deal with problematic loans, potentially making the bank better prepared to withstand financial trouble. Losses, on the other hand, take away from a bank's ability to do those things.

City National Bank of New Jersey underperformed the average on Bankrate's test of earnings, achieving a score of 0 out of a possible 30.

One widely used way to measure a bank's earnings is return on equity, calculated by dividing net income (profit, essentially) by total equity. City National Bank of New Jersey's most recent annualized quarterly return on equity was -28.87 percent, below the national average of 9.28 percent.

The bank earned net income of $-1.6 million on total equity of $10.9 million for the twelve months ended June 30, 2017. The bank had an annualized return on average assets, or ROA, of -1.44 percent, below the 1 percent deemed satisfactory in accordance with industry standards and below 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.