Safe and Sound

Bank of the West

San Francisco, CA
4
Star Rating
Bank of the West is an FDIC-insured bank started in 1874 and currently based in San Francisco, CA. Regulatory filings show the bank having equity of $12.24 billion on $86,911,273,000 in assets, as of June 30, 2017.

With 10,094 full-time employees in 560 offices in multiple states, the bank holds loans and leases worth $59.71 billion, including real estate loans of $27.10 billion. U.S. bank customers currently have $64.08 billion in deposits with the bank.

Overall, Bankrate believes that, as of June 30, 2017, Bank of the West exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Keep reading for an analysis of how the bank did on the three key criteria Bankrate used to evaluate American banks.

WHAT IS
SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

Capital acts as a bulwark against losses and affords protection for accountholders when a bank is experiencing financial instability. It follows then that a bank's level of capital is a valuable measurement of a bank's financial resilience. When it comes to safety and soundness, the more capital, the better.
Bank of the West received a score of 10 out of a possible 30 points on our test to measure capital adequacy, below the national average of 13.38.

A bank's Tier 1 capital ratio is a widely followed measure of this buffer. Bank of the West's Tier 1 capital ratio was 12.14 percent, exceeding the 6 percent level regulators consider adequate, but under the national average of 25.16 percent. The higher the capital ratio, the better the bank will be able to stand up to financial downturns.

Overall, Bank of the West held equity amounting to 14.05 percent of its assets, which exceeded the national average of 12.10 percent.

Asset Quality Score

This test's purpose is to try to understand how the bank's capitalization and allocated loan loss reserves could be affected by troubled assets, such as unpaid mortgages.

A bank with large numbers of these kinds of assets may eventually have to use capital to cover losses, reducing its equity cushion. It also means that there are likely to be many assets that are in non-accrual status and no longer earning interest for the bank, resulting in reduced earnings and potentially more risk of a future failure.

Bank of the West scored 40 out of a possible 40 points on Bankrate's test of asset quality, beating the national average of 37.62.

The percentage of problem assets a bank holds compared to its total assets is a handy indicator of asset quality.As of June 30, 2017, 0.60 percent of Bank of the West'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 1.04 percent.

Banks maintain a reserve to deal with problem assets known as an "allowance for loan and lease losses." Comparing the how large that reserve is to the total amount of problematic loans can be a widely used indicator when evaluating a bank's ability to manage troubled assets. Unfortunately, the FDIC did not provide information on Bank of the West'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, increasing its capital buffer, or be used to deal with problematic loans, likely making the bank better prepared to withstand financial shocks. Losses, on the other hand, diminish a bank's ability to do those things.

Bank of the West scored 10 out of a possible 30 on Bankrate's earnings test, falling short of the national average of 16.52.

One widely used way to measure a bank's earnings is return on equity, calculated by dividing net income (profit, essentially) by the total amount of equity. Bank of the West's most recent annualized quarterly return on equity was 4.27 percent, below the national average of 9.28 percent.

For the twelve months ended June 30, 2017, the bank recorded net income of $259.6 million on total equity of $12.24 billion. The bank reported an annualized return on average assets, or ROA, of 0.61 percent, below the 1 percent deemed satisfactory in accordance with industry standards and below the average for U.S. banks of 1.14 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.