Safe and Sound

NewDominion Bank

Charlotte, NC
5
Star Rating
Founded in 2005, NewDominion Bank is an FDIC-insured bank headquartered in Charlotte, NC. As of December 31, 2017, the bank had equity of $39.0 million on $338.5 million in assets.

Thanks to the efforts of 56 full-time employees in 3 offices in NC, the bank holds loans and leases worth $279.1 million, including $263.5 million worth of real estate loans. U.S. bank customers currently have $282.4 million in deposits with the bank.

Overall, Bankrate believes that, as of December 31, 2017, NewDominion Bank exhibited a superior condition, earning a full 5 stars for safety and soundness. Here's a breakdown of how the bank did on the three major criteria Bankrate used to grade American banks on safety and soundness.

WHAT IS
SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

Capital works as a bulwark against losses and affords protection for depositors when a bank is struggling financially. Therefore, when it comes to measuring an a bank's financial stability, capital is valuable. From a safety and soundness perspective, more capital is better.

NewDominion Bank did better than the national average of 13.13 points on our test to measure the adequacy of a bank's capital, receiving a score of 14 out of a possible 30 points.

One widely followed measure of this buffer is a bank's Tier 1 capital ratio. NewDominion Bank's Tier 1 capital ratio was 13.07 percent, higher than the 6 percent level considered adequate by regulators, but lower than the national average of 25.65 percent. A higher capital ratio suggests the bank will be better able to stand up to financial challenges.

Overall, NewDominion Bank held equity amounting to 11.53 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 loan loss reserves and overall capitalization could be affected by problem assets, such as unpaid mortgages.

Having lots of these types of assets means a bank could have to use capital to cover losses, decreasing its cushion of equity. Many of those assets are also likely to be in non-accrual status and no longer earning money, pushing down earnings and elevating the risk of a future failure.

NewDominion Bank scored 36 out of a possible 40 points on Bankrate's test of asset quality, less than the national average of 37.49.

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, 0.10 percent of NewDominion 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 1.01 percent.

Banks keep a reserve known as an "allowance for loan and lease losses" to deal with troubled assets . Comparing the reserve's size to the total amount of problem loans can be a handy indicator when evaluating a bank's ability to manage problem assets. Unfortunately, the FDIC did not provide information on NewDominion 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. Earnings can be retained by the bank, boosting its capital cushion, or be used to address problematic loans, potentially making the bank better prepared to withstand financial trouble. However, banks that are losing money are less able to do those things.

NewDominion Bank exceeded the national average on Bankrate's earnings test, achieving a score of 20 out of a possible 30.

Return on equity, calculated by dividing net income (profit, basically) by total equity, is one important way to measure a bank's earnings. NewDominion Bank's most recent annualized quarterly return on equity was 12.88 percent, above the national average of 8.10 percent.

The bank earned net income of $4.6 million on total equity of $39.0 million for the twelve months ended December 31, 2017. The bank had an annualized return on average assets, or ROA, of 1.42 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.