Safe and Sound

NewDominion Bank

Charlotte, NC
4
Star Rating
NewDominion Bank is a Charlotte, NC-based, FDIC-insured bank that opened its doors in 2005. The bank holds equity of $35.2 million on assets of $318.2 million, according to June 30, 2017, regulatory filings.

With 52 full-time employees in 3 offices in NC, the bank currently holds loans and leases worth $262.0 million, including real estate loans of $247.6 million. U.S. bank customers currently have $265.9 million in deposits with the bank.

Overall, Bankrate believes that, as of June 30, 2017, NewDominion Bank exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Keep reading for a breakdown of how the bank faired on the three key criteria Bankrate used to score American banks.

WHAT IS
SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

Capital works as a buffer against losses and provides protection for accountholders when a bank is struggling financially. Therefore, when it comes to measuring an a bank's financial resilience, capital is important. When looking at safety and soundness, more capital is preferred.
NewDominion Bank exceeded the national average of 13.38 points on our test to measure the adequacy of a bank's capital, racking up 14 out of a possible 30 points.

A bank's Tier 1 capital ratio is an essential measure of this buffer. NewDominion Bank's Tier 1 capital ratio was 12.99 percent, above the 6 percent level regulators consider adequate, but under the national average of 25.16 percent. A higher capital ratio means the bank will be better able to stand up to economic headwinds.

Overall, NewDominion Bank held equity amounting to 11.05 percent of its assets, which was lower than the national average of 12.10 percent.

Asset Quality Score

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

A bank with large numbers of these kinds of assets could eventually be required to use capital to cover losses, cutting down on its equity buffer. Many of those assets are also likely to be in non-accrual status and no longer earning interest for the bank, decreasing earnings and elevating the chances of a future failure.

NewDominion Bank finished below the national average of 37.62 on Bankrate's asset quality test, racking up 36 out of a possible 40 points .

A handy indicator of asset quality is the percentage of problem assets a bank holds compared to its total assets. As of June 30, 2017, none of NewDominion Bank's loans were noncurrent -- in other words, they were more than 90 days past due or were in non-accrual status. That's below the national average of 1.04 percent.

Banks keep a reserve known as an "allowance for loan and lease losses" to deal with troubled assets . Comparing the how large that reserve is to the total amount of at-risk loans can be a helpful indicator when evaluating a bank's ability to manage troubled assets. Unfortunately, the FDIC did not provide information on NewDominion Bank's loan loss allowance in its most recent filings.

Earnings score

How profitable a bank is affects its safety and soundness. Earnings can be retained by the bank, expanding its capital buffer, or be used to address problematic loans, potentially making the bank more resilient in tough times. However, banks that are losing money have less ability to do those things.

On Bankrate's earnings test, NewDominion Bank scored 8 out of a possible 30, lower than the national average of 16.52.

Return on equity, calculated by dividing net income (profit, basically) by the total amount of equity, is one important way to measure a bank's earnings. NewDominion Bank's most recent annualized quarterly return on equity was 3.86 percent, below the national average of 9.28 percent.

For the twelve months ended June 30, 2017, the bank earned net income of $665,000 on total equity of $35.2 million. The bank reported an annualized return on average assets, or ROA, of 0.42 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.