Safe and Sound

Central National Bank

Waco, TX
5
Star Rating
Started in 1977, Central National Bank is an FDIC-insured bank based in Waco, TX. As of December 31, 2017, the bank had equity of $72.3 million on $861.5 million in assets.

With 94 full-time employees in 4 offices in TX, the bank has amassed loans and leases worth $676.3 million, including real estate loans of $509.5 million. U.S. bank customers currently have $735.1 million in deposits with the bank.

Overall, Bankrate believes that, as of December 31, 2017, Central National Bank exhibited a superior condition, earning a full 5 stars for safety and soundness. Here's a look at how the bank fared on the three key criteria Bankrate used to grade American banks on safety and soundness.

WHAT IS
SAFE AND SOUND?

Find out

THE INSTITUTION'S SCORE

Capital Score

Capital works as a cushion against losses and as protection for account holders when a bank is struggling financially. Therefore, when it comes to measuring an an institution's financial resilience, capital is crucial. When it comes to safety and soundness, the more capital, the better.

Central National Bank scored below the national average of 13.13 on our test to measure the adequacy of a bank's capital, achieving a score of 8 out of a possible 30 points.

One widely used measure of this buffer is a bank's Tier 1 capital ratio. Central National Bank's Tier 1 capital ratio was 11.57 percent, exceeding the 6 percent level considered adequate by regulators, but less than the national average of 25.65 percent. The higher the capital ratio, the better the bank will be able to stand up to financial downturns.

Overall, Central National Bank held equity amounting to 8.40 percent of its assets, which was lower than the national average of 12.03 percent.

Asset Quality Score

Bankrate uses this test to estimate the effect of troubled assets, such as unpaid loans, on the bank's loan loss reserves and overall capitalization.

Having lots of these kinds of assets suggests a bank could eventually have to use capital to cover losses, diminishing its equity buffer. Many of those assets are also likely to be in non-accrual status and no longer earning money, reducing earnings and elevating the risk of a failure in the future.

Central 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 handy indicator of asset quality.As of December 31, 2017, 0.02 percent of Central National 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 1.01 percent.

Banks keep a reserve known as an "allowance for loan and lease losses" to deal with troubled assets . That reserve's size can be a handy indicator when evaluating a bank's ability to manage troubled assets, especially when compared to the total amount of problematic loans. Central National Bank's loan loss allowance was 7,153.78 percent of its total noncurrent loans, higher than the national average. All else being equal, a higher ratio of loan loss allowance to noncurrent loans is better.

Earnings score

A bank's ability to earn money has an effect on its long-term survivability. Earnings may be retained by the bank, giving a boost to its capital cushion, or be used to address problematic loans, potentially making the bank better prepared to withstand economic trouble. Losses, on the other hand, lessen a bank's ability to do those things.

On Bankrate's test of earnings, Central National Bank scored 30 out of a possible 30, better than the national average of 15.12.

Return on equity, calculated by dividing net income (essentially, profit) by total equity, is one important way to measure a bank's earnings. Central National Bank's most recent annualized quarterly return on equity was 21.58 percent, above the national average of 8.10 percent.

The bank reported net income of $15.3 million on total equity of $72.3 million for the twelve months ended December 31, 2017. The bank reported an annualized return on average assets, or ROA, of 1.81 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.