2020 Journal of Community Bank Studies

FIRST PLACE: Mississippi State University

major period of growth, from 2015 to early 2018, was driven by a growth of about $165 million in the bank’s net loans and leases. According to Mr. Stringer the second stage of growth, from early 2018 to late 2019, a large jump in deposits fueled the growth which is reflected in the increased investment in securities of about $40 million. According to the 2019 CSBS National Survey of Community Banks, which consisted of 571 institutions in the sample, 22.8 percent stated that the “single greatest challenge” their bank is facing presently is growing core deposits (CSBS 25). With this second stage of growth in CNB, we can see that it is staying ahead of the curve with this challenge. Capital Levels and Planning Seifried and Brew, LLC recognized Citizens National Bank as being ranked in the top 15th percentile of community banks. This achievement gives spotlight to high-performing community bank that have demonstrated “exemplary” understanding of balancing risk and reward by management. CNB, looking to

continue to be ranked among the best banks in the country, wants to maintain its capital level in relation to the minimum ratios that were set by Basel III. Basel III requires a minimum of 6% capital ratio. Both the peer group and CNB’s minimum ratios are currently above average. CNB has historically stayed above average dealing with its Tier 1 Risk-based Capital. For the last five years, Tier 1 Capital has maintained a relatively constant level around 10%. According to Basel III, the minimum required Tier 1 Capital ratio is 8%. The bank has a ratio of 10% which implies they are in good capital health. Taking this into consideration, it is safe to consider the bank to be well-capitalized institution. In the future, CNB is looking to further invest into loans supported by the SBA lending program. During these last five years, there has been a major growth in the company due to loan growth and deposits. Mr. Stringer commented that the bank was placing more focus on loan growth and deposits. Liquidity

One measure commonly looked at to measure a banks liquidity is their Net Loans and Leases to Deposits Ratio (LDR). LDR measures a banks liquidity by comparing a bank’s loans (assets) to its total deposits (liabilities) within the same time period. A higher LDR indicates that a bank may be taking on additional risk by not have enough liquidity to handle large unexpected expenses,

Tier 1 (Core) Risk-Based Capital (% of Total Assets)

CNB

PG

11.50%

11.00%

10.50%

10.00%

11.23%

9.50%

10.64%

10.57%

Percentage 9.00%

10.70%

10.00%

10.16%

10.24%

9.83%

10.45%

9.39%

8.50%

8.00%

2015

2016

2017

2018

2019

Year

11