Safe and Sound

Citizens State Bank

Buffalo, TX
5
Star Rating
Citizens State Bank is an FDIC-insured bank started in 1925 and currently based in Buffalo, TX. Regulatory filings show the bank having equity of $115.4 million on $915.4 million in assets, as of December 31, 2017.

U.S. bank customers have $796.1 million on deposit at 9 offices in TX run by 109 full-time employees. With that footprint, the bank currently holds loans and leases worth $145.9 million, including real estate loans of $82.0 million.

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

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THE INSTITUTION'S SCORE

Capital Score

Capital is a crucial measurement of an institution's financial fortitude. It works as a buffer against losses and as protection for depositors when a bank is experiencing financial instability. When looking at safety and soundness, more capital is better.

Citizens State Bank achieved a score of 16 out of a possible 30 points on our test to measure capital adequacy, above the national average of 13.13.

One important measure of this buffer is a bank's Tier 1 capital ratio. Citizens State Bank's Tier 1 capital ratio was 30.74 percent, above the 6 percent level considered adequate by regulators, and higher than the national average of 25.65 percent. A higher capital ratio suggests the bank will be better able to stand up to economic downturns.

Overall, Citizens State Bank held equity amounting to 12.61 percent of its assets, which exceeded the national average of 12.03 percent.

Asset Quality Score

This test's purpose is to try to understand how the bank's loan loss reserves and overall capitalization could be affected by problem assets, such as past-due loans.

Having extensive holdings of these kinds of assets means a bank could eventually have to use capital to absorb losses, reducing its cushion of equity. It also means that there are likely to be many assets that are in non-accrual status and no longer earning interest for the bank, pushing down earnings and elevating the risk of a failure in the future.

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

A useful indicator of asset quality is the percentage of problem assets a bank holds compared to its total assets. As of December 31, 2017, 2.67 percent of Citizens State Bank's loans were noncurrent -- in other words, they were more than 90 days past due or were in non-accrual status. That's above the national average of 1.01 percent.

Banks keep a reserve to handle troubled assets known as an "allowance for loan and lease losses." That reserve's size can be a useful indicator when evaluating a bank's ability to manage problem assets, especially when compared to the total amount of at-risk loans. Unfortunately, the FDIC did not provide information on Citizens State Bank's loan loss allowance in its most recent filings.

Earnings score

How profitable a bank is has an effect on its safety and soundness. A bank can retain its earnings, boosting its capital buffer, or put them to work addressing problematic loans, likely making the bank better prepared to withstand economic shocks. Losses, on the other hand, reduce a bank's ability to do those things.

Citizens State Bank scored 26 out of a possible 30 on Bankrate's earnings test, 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. The most recent annualized quarterly return on equity for Citizens State Bank was 18.15 percent, above the national average of 8.10 percent.

For the twelve months ended December 31, 2017, the bank earned net income of $18.8 million on total equity of $115.4 million. The bank reported an annualized return on average assets, or ROA, of 2.08 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.