Safe and Sound

Columbia National Bank

Columbia, IL
4
Star Rating
Columbia National Bank is a Columbia, IL-based, FDIC-insured bank dating back to 1976. The bank holds equity of $6.0 million on assets of $47.6 million, according to December 31, 2017, regulatory filings.

Thanks to the efforts of 14 full-time employees, the bank holds loans and leases worth $26.5 million, including $16.4 million worth of real estate loans. U.S. bank customers currently have $41.4 million in deposits with the bank.

Overall, Bankrate believes that, as of December 31, 2017, Columbia National Bank exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Keep reading for a look at how the bank did on the three important 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 bulwark against losses and provides protection for depositors when a bank is experiencing financial instability. Therefore, a bank's level of capital is a useful measurement of a bank's financial strength. From a safety and soundness perspective, the higher the capital, the better.

Columbia National Bank racked up 16 out of a possible 30 points on our test to measure capital adequacy, beating the national average of 13.13.

One widely followed measure of this buffer is a bank's Tier 1 capital ratio. Columbia National Bank's Tier 1 capital ratio was 22.13 percent, higher than the 6 percent level considered adequate by regulators, but under the national average of 25.65 percent. A higher capital ratio means the bank will be better able to stand up to economic headwinds.

Overall, Columbia National Bank held equity amounting to 12.67 percent of its assets, which exceeded the national average of 12.03 percent.

Asset Quality Score

In this test, Bankrate tries to determine the effect of problem assets, such as past-due loans, on the bank's reserves set aside to cover loan losses, as well as overall capitalization.

Having a large number of these types of assets may eventually force a bank to use capital to cover losses, reducing its equity cushion. It also means that there are likely to be many assets that are in non-accrual status and thus aren't earning money, resulting in depressed earnings and potentially more risk of a failure in the future.

On Bankrate's asset quality test, Columbia National Bank scored 40 out of a possible 40 points, exceeding the national average of 37.49 points.

The percentage of problem assets a bank holds compared to its total assets is a useful indicator of asset quality.As of December 31, 2017, 0.61 percent of Columbia 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 maintain a reserve to handle troubled assets known as an "allowance for loan and lease losses." The size of that reserve can be a useful indicator when evaluating a bank's ability to manage troubled assets, especially when compared to the total amount of problem loans. Unfortunately, the FDIC did not provide information on Columbia National Bank's loan loss allowance in its most recent filings.

Earnings score

A bank's ability to earn money affects its safety and soundness. A bank can retain its earnings, expanding its capital cushion, or use them to address problematic loans, potentially making the bank more resilient in tough times. Conversely, losses lessen a bank's ability to do those things.

On Bankrate's earnings test, Columbia National Bank scored 12 out of a possible 30, coming in below the national average of 15.12.

One important measure of a bank's earnings is return on equity, calculated by dividing net income (essentially profit) by the total amount of equity. The most recent annualized quarterly return on equity for Columbia National Bank was 5.87 percent, below the national average of 8.10 percent.

For the twelve months ended December 31, 2017, the bank recorded net income of $348,000 on total equity of $6.0 million. The bank reported an annualized return on average assets, or ROA, of 0.72 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.