Safe and Sound

City National Bank of New Jersey

Newark, NJ
1
Star Rating
City National Bank of New Jersey is an FDIC-insured bank started in 1973 and currently headquartered in Newark, NJ. Regulatory filings show the bank having equity of $8.5 million on assets of $213.9 million, as of December 31, 2017.

With 74 full-time employees in 4 offices in multiple states, the bank holds loans and leases worth $116.5 million, including real estate loans of $100.5 million. U.S. bank customers currently have $192.1 million in deposits with the bank.

Overall, Bankrate believes that, as of December 31, 2017, City National Bank of New Jersey exhibited a significantly below-average condition, earning 1 out of 5 stars for safety and soundness. Here's an analysis of how the bank did on the three key criteria Bankrate used to score U.S. banks.

WHAT IS
SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

Capital acts as a bulwark against losses and as protection for depositors when a bank is struggling financially. Therefore, a bank's level of capital is a key measurement of an institution's financial strength. From a safety and soundness perspective, the more capital, the better.

City National Bank of New Jersey fell below the national average of 13.13 on our test to measure the adequacy of a bank's capital, achieving a score of 0 out of a possible 30 points.

A bank's Tier 1 capital ratio is a widely used measure of this buffer. City National Bank of New Jersey's Tier 1 capital ratio was 7.87 percent, higher than the 6 percent level regulators consider adequate, but below 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, City National Bank of New Jersey held equity amounting to 3.99 percent of its assets, which was lower than the national average of 12.03 percent.

Asset Quality Score

This test's purpose is to try to understand how the bank's reserves set aside to cover loan losses, as well as overall capitalization, could be affected by problem assets, such as unpaid mortgages.

Having lots of these types of assets suggests a bank could eventually have 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 reduced earnings and potentially more risk of a future failure.

On Bankrate's asset quality test, City National Bank of New Jersey scored 20 out of a possible 40 points, coming in below the national average of 37.49 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, 2.26 percent of City National Bank of New Jersey'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 deal with problem assets known as an "allowance for loan and lease losses." How large that reserve is 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. Unfortunately, the FDIC did not provide information on City National Bank of New Jersey's loan loss allowance in its most recent filings.

Earnings score

A bank's earnings performance has an effect on its safety and soundness. A bank can retain its earnings, expanding its capital cushion, or put them to work addressing problematic loans, potentially making the bank better able to withstand financial shocks. Banks that are losing money, however, are less able to do those things.

City National Bank of New Jersey did below-average on Bankrate's test of earnings, achieving a score of 0 out of a possible 30.

Return on equity, calculated by dividing net income (profit, essentially) by total equity, is one widely used measure of a bank's earnings. The most recent annualized quarterly return on equity for City National Bank of New Jersey was -9.97 percent, below the national average of 8.10 percent.

The bank recorded net income of $-811,000 on total equity of $8.5 million for the twelve months ended December 31, 2017. The bank experienced an annualized return on average assets, or ROA, of -0.37 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.