Safe and Sound

Cedar Hill National Bank

Charlotte, NC
5
Star Rating
Cedar Hill National Bank is a Charlotte, NC-based, FDIC-insured bank started in 1998. As of December 31, 2017, the bank held equity of $9.1 million on $11.6 million in assets.

With 27 full-time employees, the bank currently holds loans and leases worth $0, including real estate loans of $0. U.S. bank customers currently have $2.0 million in deposits with the bank.

Overall, Bankrate believes that, as of December 31, 2017, Cedar Hill National Bank exhibited a superior condition, earning a full 5 stars for safety and soundness. Here's a breakdown of how the bank fared on the three major criteria Bankrate used to score American banks on safety and soundness.

WHAT IS
SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

Capital is a useful measurement of a bank's financial resilience. It acts as a buffer against losses and as protection for accountholders when a bank is experiencing financial instability. From a safety and soundness perspective, more capital is preferred.

Cedar Hill National Bank scored 30 out of a possible 30 points on our test to measure capital adequacy, beating out the national average of 13.13.

A bank's Tier 1 capital ratio is an important measure of this buffer. Cedar Hill National Bank's Tier 1 capital ratio was 178.93 percent, above the 6 percent level regulators consider adequate, and higher than the national average of 25.65 percent. The higher the capital ratio, the better the bank will be able to weather financial downturns.

Overall, Cedar Hill National Bank held equity amounting to 78.68 percent of its assets, which exceeded the national average of 12.03 percent.

Asset Quality Score

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

A bank with a large number of these kinds of assets may eventually have 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 money, decreasing earnings and elevating the chances of a future failure.

Cedar Hill National Bank scored 40 out of a possible 40 points on Bankrate's test of asset quality, exceeding the national average of 37.49.

The percentage of problem assets a bank holds compared to its total assets is a useful indicator of asset quality.

Banks maintain a reserve known as an "allowance for loan and lease losses" to deal with problem assets . Comparing the reserve's size to the total amount of at-risk loans can be a handy indicator when evaluating a bank's ability to manage problem assets. Unfortunately, the FDIC did not provide information on Cedar Hill National 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, giving a boost to its capital buffer, or be used to deal with problematic loans, likely making the bank better able to withstand financial trouble. Banks that are losing money, however, are less able to do those things.

Cedar Hill National Bank scored 8 out of a possible 30 on Bankrate's earnings test, below the national average of 15.12.

Return on equity, calculated by dividing net income (profit, essentially) by total equity, is one important way to measure a bank's earnings. Cedar Hill National Bank's most recent annualized quarterly return on equity was 3.62 percent, below the national average of 8.10 percent.

For the twelve months ended December 31, 2017, the bank reported net income of $323,000 on total equity of $9.1 million. The bank had an annualized return on average assets, or ROA, of 2.85 percent, above the 1 percent deemed satisfactory in accordance with industry standards, and above 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.