Safe and Sound

Classic Bank, National Association

Cameron, TX
4
Star Rating
Founded in 1889, Classic Bank, National Association is an FDIC-insured bank based in Cameron, TX. The bank has equity of $30.3 million on $324,494,000 in assets, according to June 30, 2017, regulatory filings.

With 83 full-time employees in 6 offices in TX, the bank currently holds loans and leases worth $214.5 million, including real estate loans of $144.0 million. U.S. bank customers currently have $282.2 million in deposits with the bank.

Overall, Bankrate believes that, as of June 30, 2017, Classic Bank, National Association exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Keep reading for a breakdown of how the bank did on the three important criteria Bankrate used to evaluate U.S. banks.

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THE INSTITUTION'S SCORE

Capital Score

Capital is a key measurement of an institution's financial strength. It acts as a bulwark against losses and affords protection for depositors when a bank is experiencing economic instability. When it comes to safety and soundness, the higher the capital, the better.
On our test to measure the adequacy of a bank's capital, Classic Bank, National Association received a score of 10 out of a possible 30 points, coming in below the national average of 13.38.

A bank's Tier 1 capital ratio is a widely followed measure of this buffer. Classic Bank, National Association's Tier 1 capital ratio was 13.44 percent, above the 6 percent level considered adequate by regulators, but lower than the national average of 25.16 percent. A higher capital ratio means the bank will be better able to stand up to financial downturns.

Overall, Classic Bank, National Association held equity amounting to 9.33 percent of its assets, which was lower than the national average of 12.10 percent.

Asset Quality Score

Bankrate uses this test to determine the impact of troubled assets, such as past-due mortgages, on the bank's reserves set aside to cover loan losses, as well as overall capitalization.

A bank with lots of these types of assets could eventually be forced to use capital to absorb losses, cutting down on its equity cushion. It also means that there are likely to be many assets that are in non-accrual status and no longer earning money, resulting in lower earnings and potentially more risk of a failure in the future.

Classic Bank, National Association scored below the national average of 37.62 on Bankrate's asset quality test, racking up 32 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 June 30, 2017, 1.96 percent of Classic Bank, National Association'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 keep a reserve known as an "allowance for loan and lease losses" to deal with problem assets . The size of that reserve can be a useful indicator when evaluating a bank's ability to manage problem assets, especially when compared to the total amount of problem loans. Unfortunately, the FDIC did not provide information on Classic Bank, National Association's loan loss allowance in its most recent filings.

Earnings score

A bank's ability to earn money has an effect on its safety and soundness. Earnings can be retained by the bank, boosting its capital cushion, or be used to address problematic loans, potentially making the bank more resilient in times of trouble. However, banks that are losing money have less ability to do those things.

On Bankrate's earnings test, Classic Bank, National Association scored 20 out of a possible 30, beating the national average of 16.52.

Return on equity, calculated by dividing net income (profit, essentially) by total equity, is one important way to measure a bank's earnings. The most recent annualized quarterly return on equity for Classic Bank, National Association was 12.29 percent, above the national average of 9.28 percent.

The bank recorded net income of $1.8 million on total equity of $30.3 million for the twelve months ended June 30, 2017. The bank experienced an annualized return on average assets, or ROA, of 1.10 percent, above the 1 percent deemed satisfactory in accordance with industry standards, but 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.