Safe and Sound

Commercial Bank of Texas, National Association

Nacogdoches, TX
4
Star Rating
Commercial Bank of Texas, National Association is a Nacogdoches, TX-based, FDIC-insured bank that opened its doors in 1901. As of December 31, 2017, the bank had equity of $65.1 million on assets of $671.7 million.

Thanks to the efforts of 193 full-time employees in 19 offices in TX, the bank has amassed loans and leases worth $384.4 million, including real estate loans of $281.9 million. The bank currently holds $596.9 million in deposits from U.S. customers.

Overall, Bankrate believes that, as of December 31, 2017, Commercial Bank of Texas, National Association exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Here's a look at how the bank did on the three key criteria Bankrate used to grade U.S. banks.

WHAT IS
SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

Capital acts as a buffer against losses and affords protection for account holders when a bank is experiencing economic trouble. It follows then that when it comes to measuring an an institution's financial resilience, capital is essential. From a safety and soundness perspective, the more capital, the better.

Commercial Bank of Texas, National Association received a score of 8 out of a possible 30 points on our test to measure the adequacy of a bank's capital, lower than the national average of 13.13.

A bank's Tier 1 capital ratio is a widely used measure of this buffer. Commercial Bank of Texas, National Association's Tier 1 capital ratio was 15.13 percent, higher than the 6 percent level regulators consider adequate, but lower than the national average of 25.65 percent. A higher capital ratio means the bank will be better able to stand up to economic downturns.

Overall, Commercial Bank of Texas, National Association held equity amounting to 9.69 percent of its assets, which was lower than the national average of 12.03 percent.

Asset Quality Score

This test is intended 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.

A bank with extensive holdings of these types of assets may eventually be required to use capital to cover losses, shrinking its buffer of equity. Many of those assets are also likely to be in non-accrual status and thus aren't earning money, resulting in reduced earnings and potentially more risk of a failure in the future.

Commercial Bank of Texas, National Association scored 36 out of a possible 40 points on Bankrate's asset quality test, below the national average of 37.49.

A widely used indicator of asset quality is the percentage of problem assets a bank holds compared to its total assets. As of December 31, 2017, 1.08 percent of Commercial Bank of Texas, National Association'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 maintain a reserve known as an "allowance for loan and lease losses" to deal with problem assets . How large that reserve is can be a helpful indicator when evaluating a bank's ability to manage problem assets, especially when compared to the total amount of problem loans. Unfortunately, the FDIC did not provide information on Commercial Bank of Texas, National Association's loan loss allowance in its most recent filings.

Earnings score

How profitable a bank is affects its safety and soundness. A bank can retain its earnings, boosting its capital cushion, or use them to address problematic loans, potentially making the bank more resilient in tough times. However, banks that are losing money are less able to do those things.

Commercial Bank of Texas, National Association scored 16 out of a possible 30 on Bankrate's test of earnings, better than the national average of 15.12.

One widely used measure of a bank's earnings is return on equity, calculated by dividing net income (profit, essentially) by total equity. The most recent annualized quarterly return on equity for Commercial Bank of Texas, National Association was 7.91 percent, below the national average of 8.10 percent.

For the twelve months ended December 31, 2017, the bank earned net income of $5.1 million on total equity of $65.1 million. The bank had an annualized return on average assets, or ROA, of 0.76 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.