Safe and Sound

The City National Bank of Sulphur Springs

Sulphur Springs, TX
5
Star Rating
The City National Bank of Sulphur Springs is an FDIC-insured bank started in 1889 and currently headquartered in Sulphur Springs, TX. Regulatory filings show the bank having equity of $75.8 million on assets of $679.9 million, as of December 31, 2017.

U.S. bank customers have $593.3 million on deposit at 12 offices in TX run by 191 full-time employees. With that footprint, the bank currently holds loans and leases worth $485.4 million, including $366.3 million worth of real estate loans.

Overall, Bankrate believes that, as of December 31, 2017, The City National Bank of Sulphur Springs exhibited a superior condition, earning a full 5 stars for safety and soundness. Here's a look at how the bank did on the three key criteria Bankrate used to score U.S. banks on safety and soundness.

WHAT IS
SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

Capital is an important measurement of a bank's financial fortitude. It acts as a bulwark against losses and as protection for depositors when a bank is experiencing economic trouble. When looking at safety and soundness, the higher the capital, the better.

The City National Bank of Sulphur Springs finished below the national average of 13.13 on our test to measure the adequacy of a bank's capital, scoring 10 out of a possible 30 points.

One way to measure this buffer is looking at a bank's Tier 1 capital ratio. The City National Bank of Sulphur Springs's Tier 1 capital ratio was 13.57 percent, exceeding the 6 percent level regulators consider adequate, but less than the national average of 25.65 percent. A higher capital ratio means the bank will be better able to weather financial difficulties.

Overall, The City National Bank of Sulphur Springs held equity amounting to 11.15 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 loans.

A bank with large numbers of these kinds of assets could eventually be forced to use capital to cover losses, reducing its buffer of equity. Many of those assets are also likely to be in non-accrual status and thus aren't earning interest for the bank, diminishing earnings and elevating the chances of a future failure.

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

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, 0.30 percent of The City National Bank of Sulphur Springs'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 maintain a reserve to deal with troubled assets known as an "allowance for loan and lease losses." The size of that reserve can be a widely used indicator when evaluating a bank's ability to manage troubled assets, especially when compared to the total amount of problematic loans. Unfortunately, the FDIC did not provide information on The City National Bank of Sulphur Springs's loan loss allowance in its most recent filings.

Earnings score

How profitable a bank is has an effect on its safety and soundness. A bank can retain its earnings, giving a boost to its capital buffer, or put them to work addressing problematic loans, likely making the bank better prepared to withstand financial shocks. Losses, on the other hand, lessen a bank's ability to do those things.

On Bankrate's earnings test, The City National Bank of Sulphur Springs scored 24 out of a possible 30, beating the national average of 15.12.

One important measure of a bank's earnings is return on equity, or net income (essentially profit) divided by the total amount of equity. The most recent annualized quarterly return on equity for The City National Bank of Sulphur Springs was 15.39 percent, above the national average of 8.10 percent.

For the twelve months ended December 31, 2017, the bank earned net income of $11.3 million on total equity of $75.8 million. The bank experienced an annualized return on average assets, or ROA, of 1.74 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.