Safe and Sound

Cornerstone National Bank

Easley, SC
3
Star Rating
Cornerstone National Bank is an Easley, SC-based, FDIC-insured bank that opened its doors in 1999. As of June 30, 2017, the bank held equity of $18.3 million on assets of $150.8 million.

Thanks to the work of 31 full-time employees in 3 offices in SC, the bank has amassed loans and leases worth $65.2 million, including real estate loans of $62.0 million. The bank currently holds $131.3 million in deposits from U.S. customers.

Overall, Bankrate believes that, as of June 30, 2017, Cornerstone 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 major criteria Bankrate used to grade American banks.

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THE INSTITUTION'S SCORE

Capital Score

Capital works as a cushion against losses and provides protection for depositors when a bank is experiencing economic instability. Therefore, when it comes to measuring an an institution's financial stability, capital is essential. From a safety and soundness perspective, the more capital, the better.
Cornerstone National Bank scored 16 out of a possible 30 points on our test to measure the adequacy of a bank's capital, exceeding the national average of 13.38.

One essential measure of this buffer is a bank's Tier 1 capital ratio. Cornerstone National Bank's Tier 1 capital ratio was 21.77 percent, exceeding the 6 percent level regulators consider adequate, but lower than the national average of 25.16 percent. A higher capital ratio suggests the bank will be better able to stand up to financial downturns.

Overall, Cornerstone National Bank held equity amounting to 12.13 percent of its assets, which exceeded the national average of 12.10 percent.

Asset Quality Score

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

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

Cornerstone National Bank finished below the national average of 37.62 on Bankrate's test of asset quality, racking up 36 out of a possible 40 points .

A handy indicator of asset quality is the percentage of problem assets a bank holds compared to its total assets. As of June 30, 2017, none of Cornerstone 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 1.04 percent.

Banks keep a reserve to handle troubled assets known as an "allowance for loan and lease losses." Comparing the how large that reserve is to the total amount of problematic loans can be a useful indicator when evaluating a bank's ability to manage problem assets. Unfortunately, the FDIC did not provide information on Cornerstone National Bank's loan loss allowance in its most recent filings.

Earnings score

How profitable a bank is affects its safety and soundness. Earnings may be retained by the bank, expanding its capital cushion, or be used to address problematic loans, potentially making the bank better able to withstand economic shocks. However, banks that are losing money are less able to do those things.

On Bankrate's earnings test, Cornerstone National Bank scored 10 out of a possible 30, lower than the national average of 16.52.

Return on equity, calculated by dividing net income (profit, basically) by total equity, is one important way to measure a bank's earnings. Cornerstone National Bank's most recent annualized quarterly return on equity was 4.14 percent, below the national average of 9.28 percent.

The bank earned net income of $394,000 on total equity of $18.3 million for the twelve months ended June 30, 2017. The bank reported an annualized return on average assets, or ROA, of 0.53 percent, below the 1 percent deemed satisfactory in accordance with industry standards and below the average for U.S. banks of 1.14 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.