Safe and Sound

Xenith Bank

Richmond, VA
3
Star Rating
Founded in 1987, Xenith Bank is an FDIC-insured bank based in Richmond, VA. Regulatory filings show the bank having equity of $434.1 million on assets of $3.28 billion, as of December 31, 2017.

U.S. bank customers have $2.57 billion on deposit at 41 offices in multiple states run by 434 full-time employees. With that footprint, the bank has amassed loans and leases worth $2.49 billion, $1.64 billion of which are for real estate.

Overall, Bankrate believes that, as of December 31, 2017, Xenith Bank exhibited a generally satisfactory condition, earning 3 out of 5 stars for safety and soundness. Here's a breakdown of how the bank fared on the three major criteria Bankrate used to score U.S. banks.

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THE INSTITUTION'S SCORE

Capital Score

When it comes to measuring an an institution's financial strength, capital is important. It works as a bulwark against losses and as protection for depositors when a bank is experiencing economic instability. From a safety and soundness perspective, the more capital, the better.

Xenith Bank achieved a score of 16 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. Xenith Bank's Tier 1 capital ratio was 11.45 percent, higher than the 6 percent level considered adequate by regulators, but below the national average of 25.65 percent. The higher the capital ratio, the better the bank will be able to weather financial downturns.

Overall, Xenith Bank held equity amounting to 13.25 percent of its assets, which exceeded the national average of 12.03 percent.

Asset Quality Score

This test is intended to estimate how the bank's loan loss reserves and overall capitalization could be affected by problem assets, such as past-due mortgages.

Having lots of these types of assets means a bank may have to use capital to absorb losses, decreasing its equity cushion. It also means that there are likely to be many assets that are in non-accrual status and thus aren't earning interest for the bank, pushing down earnings and increasing the risk of a future failure.

Xenith Bank scored 40 out of a possible 40 points on Bankrate's asset quality test, exceeding 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, 0.78 percent of Xenith 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 to handle problem assets known as an "allowance for loan and lease losses." Comparing 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 Xenith 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, giving a boost to its capital cushion, or be used to deal with problematic loans, likely making the bank better prepared to withstand financial shocks. Losses, on the other hand, take away from a bank's ability to do those things.

Xenith Bank scored 0 out of a possible 30 on Bankrate's test of earnings, failing to reach the national average of 15.12.

One widely used way to measure a bank's earnings is return on equity, or net income (profit, essentially) divided by total equity. Xenith Bank's most recent annualized quarterly return on equity was -7.29 percent, below the national average of 8.10 percent.

The bank reported net income of $-34.2 million on total equity of $434.1 million for the twelve months ended December 31, 2017. The bank had an annualized return on average assets, or ROA, of -1.06 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.