Safe and Sound

Cendera Bank, National Association

Bells, TX
4
Star Rating
Started in 1904, Cendera Bank, National Association is an FDIC-insured bank headquartered in Bells, TX. The bank holds equity of $9.2 million on assets of $92.7 million, according to December 31, 2017, regulatory filings.

U.S. bank customers have $79.5 million on deposit at 3 offices in TX run by 21 full-time employees. With that footprint, the bank holds loans and leases worth $74.6 million, $66.9 million of which are for real estate.

Overall, Bankrate believes that, as of December 31, 2017, Cendera Bank, National Association exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Here's a breakdown of how the bank did on the three important criteria Bankrate used to evaluate American banks.

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THE INSTITUTION'S SCORE

Capital Score

Capital acts as a cushion against losses and provides protection for account holders during times of financial instability for the bank. Therefore, a bank's level of capital is a useful measurement of a bank's financial resilience. When it comes to safety and soundness, more capital is better.

Cendera Bank, National Association received a score of 10 out of a possible 30 points on our test to measure capital adequacy, falling short of the national average of 13.13.

One important measure of this buffer is a bank's Tier 1 capital ratio. Cendera Bank, National Association's Tier 1 capital ratio was 14.90 percent, above the 6 percent level considered adequate by regulators, but under the national average of 25.65 percent. The higher the capital ratio, the better the bank will be able to weather economic headwinds.

Overall, Cendera Bank, National Association held equity amounting to 9.89 percent of its assets, which was lower than the national average of 12.03 percent.

Asset Quality Score

In this test, Bankrate tries to estimate the effect of problem assets, such as unpaid mortgages, on the bank's loan loss reserves and overall capitalization.

Having extensive holdings of these kinds of assets may eventually require a bank to use capital to absorb losses, decreasing its equity buffer. Many of those assets are also likely to be in non-accrual status and thus aren't earning interest for the bank, resulting in depressed earnings and potentially more risk of a future failure.

Cendera Bank, National Association beat out the national average of 37.49 on Bankrate's test of asset quality, racking up 40 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 December 31, 2017, 0.82 percent of Cendera Bank, National Association'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 1.01 percent.

Banks maintain a reserve known as an "allowance for loan and lease losses" to deal with troubled assets . How large that reserve is can be a handy indicator when evaluating a bank's ability to manage problem assets, especially when compared to the total amount of problematic loans. Unfortunately, the FDIC did not provide information on Cendera Bank, National Association'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, increasing its capital buffer, or be used to address problematic loans, likely making the bank better able to withstand economic shocks. Obviously, banks that are losing money have less ability to do those things.

On Bankrate's earnings test, Cendera Bank, National Association scored 18 out of a possible 30, exceeding the national average of 15.12.

One widely used way to measure a bank's earnings is return on equity, or net income (essentially profit) divided by total equity. Cendera Bank, National Association's most recent annualized quarterly return on equity was 10.27 percent, above the national average of 8.10 percent.

For the twelve months ended December 31, 2017, the bank earned net income of $894,000 on total equity of $9.2 million. The bank reported an annualized return on average assets, or ROA, of 1.03 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.