Safe and Sound

The Citizens National Bank of Hillsboro

Hillsboro, TX
5
Star Rating
The Citizens National Bank of Hillsboro is an FDIC-insured bank founded in 1893 and currently based in Hillsboro, TX. The bank holds equity of $22.6 million on assets of $195.1 million, according to December 31, 2017, regulatory filings.

Thanks to the efforts of 27 full-time employees in 2 offices in TX, the bank currently holds loans and leases worth $37.3 million, including real estate loans of $23.6 million. The bank currently holds $154.5 million in deposits from U.S. customers.

Overall, Bankrate believes that, as of December 31, 2017, The Citizens National Bank of Hillsboro exhibited a superior condition, earning a full 5 stars for safety and soundness. Keep reading for a breakdown of how the bank did on the three major criteria Bankrate used to evaluate American banks on safety and soundness.

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THE INSTITUTION'S SCORE

Capital Score

Capital works as a bulwark against losses and affords protection for account holders when a bank is struggling financially. Therefore, a bank's level of capital is a valuable measurement of an institution's financial resilience. When looking at safety and soundness, more capital is preferred.

The Citizens National Bank of Hillsboro achieved a score of 14 out of a possible 30 points on our test to measure capital adequacy, better than the national average of 13.13.

One widely followed measure of this buffer is a bank's Tier 1 capital ratio. The Citizens National Bank of Hillsboro's Tier 1 capital ratio was 31.24 percent, above the 6 percent level considered adequate by regulators, and exceeding the national average of 25.65 percent. The higher the capital ratio, the better the bank will be able to weather financial difficulties.

Overall, The Citizens National Bank of Hillsboro held equity amounting to 11.58 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 past-due mortgages.

Having large numbers of these kinds of assets suggests a bank could have to use capital to cover losses, cutting down on its equity buffer. Many of those assets are also likely to be in non-accrual status and no longer earning money, pushing down earnings and increasing the risk of a failure in the future.

The Citizens National Bank of Hillsboro scored 40 out of a possible 40 points on Bankrate's asset quality test, exceeding the national average of 37.49.

The percentage of problem assets a bank holds compared to its total assets is a handy indicator of asset quality.As of December 31, 2017, 0.19 percent of The Citizens National Bank of Hillsboro'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 keep a reserve known as an "allowance for loan and lease losses" to deal with problem assets . The size of that reserve can be a handy 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 The Citizens National Bank of Hillsboro's loan loss allowance in its most recent filings.

Earnings score

How profitable a bank is has an effect on its long-term survivability. Earnings can be retained by the bank, boosting its capital buffer, or be used to address problematic loans, likely making the bank better able to withstand economic shocks. Banks that are losing money, however, have less ability to do those things.

The Citizens National Bank of Hillsboro scored 18 out of a possible 30 on Bankrate's test of earnings, above the national average of 15.12.

Return on equity, calculated by dividing net income (profit, essentially) by the total amount of equity, is one widely used measure of a bank's earnings. The Citizens National Bank of Hillsboro's most recent annualized quarterly return on equity was 9.22 percent, above the national average of 8.10 percent.

The bank recorded net income of $2.1 million on total equity of $22.6 million for the twelve months ended December 31, 2017. The bank reported an annualized return on average assets, or ROA, of 1.10 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.