Safe and Sound

Citizens National Bank

Crockett, TX
4
Star Rating
Started in 1982, Citizens National Bank is an FDIC-insured bank based in Crockett, TX. The bank holds equity of $9.6 million on assets of $92.6 million, according to December 31, 2017, regulatory filings.

With 17 full-time employees, the bank currently holds loans and leases worth $30.7 million, including real estate loans of $16.0 million. U.S. bank customers currently have $80.7 million in deposits with the bank.

Overall, Bankrate believes that, as of December 31, 2017, Citizens National Bank 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 key criteria Bankrate used to score U.S. banks.

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SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

Capital works as a buffer against losses and as protection for account holders when a bank is experiencing financial instability. It follows then that a bank's level of capital is an essential measurement of an institution's financial fortitude. 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, Citizens National Bank received a score of 12 out of a possible 30 points, below the national average of 13.13.

One widely used measure of this buffer is a bank's Tier 1 capital ratio. Citizens National Bank's Tier 1 capital ratio was 23.68 percent, higher than the 6 percent level considered adequate by regulators, but below the national average of 25.65 percent. The higher the capital ratio, the better the bank will be able to weather economic downturns.

Overall, Citizens National Bank held equity amounting to 10.42 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 impact of troubled assets, such as unpaid mortgages, on the bank's reserves set aside to cover loan losses, as well as overall capitalization.

A bank with a large number of these kinds of assets may eventually have to use capital to absorb losses, decreasing its equity buffer. It also means that there are likely to be many assets that are in non-accrual status and thus aren't earning interest for the bank, resulting in lower earnings and potentially more risk of a future failure.

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

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, 0.04 percent of Citizens National Bank's loans were noncurrent, meaning 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 . 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. Citizens National Bank's loan loss allowance was 5,138.46 percent of its total noncurrent loans, exceeding the national average. All things being equal, the higher the ratio of loan loss allowance to noncurrent loans, the better.

Earnings score

A bank's profitability affects its safety and soundness. Earnings may be retained by the bank, giving a boost to its capital buffer, or be used to address problematic loans, likely making the bank better able to withstand financial shocks. However, banks that are losing money are less able to do those things.

On Bankrate's earnings test, Citizens National Bank scored 10 out of a possible 30, lower than the national average of 15.12.

One key measure of a bank's earnings is return on equity, or net income (profit, basically) divided by the total amount of equity. Citizens National Bank's most recent annualized quarterly return on equity was 4.29 percent, below the national average of 8.10 percent.

For the twelve months ended December 31, 2017, the bank reported net income of $407,000 on total equity of $9.6 million. The bank reported an annualized return on average assets, or ROA, of 0.44 percent, below the 1 percent deemed satisfactory in accordance with industry standards and below 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.