Safe and Sound

Capital Community Bank

Provo, UT
5
Star Rating
Provo, UT-based Capital Community Bank is an FDIC-insured bank started in 1993. As of June 30, 2017, the bank held equity of $31.2 million on assets of $343.5 million.

U.S. bank customers have $288.8 million on deposit at 5 offices in UT run by 64 full-time employees. With that footprint, the bank holds loans and leases worth $292.1 million, including real estate loans of $149.6 million.

Overall, Bankrate believes that, as of June 30, 2017, Capital Community Bank exhibited a superior condition, earning a full 5 stars for safety and soundness. Keep reading for a breakdown of how the bank faired on the three important criteria Bankrate used to grade American banks on safety and soundness.

WHAT IS
SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

Capital works as a bulwark against losses and as protection for accountholders during times of economic trouble for the bank. Therefore, a bank's level of capital is an important measurement of an institution's financial resilience. When looking at safety and soundness, the more capital, the better.
On our test to measure capital adequacy, Capital Community Bank received a score of 10 out of a possible 30 points, lower than the national average of 13.38.

One way to measure this buffer is looking at a bank's Tier 1 capital ratio. Capital Community Bank's Tier 1 capital ratio was 9.99 percent, higher than the 6 percent level considered adequate by regulators, but lower than the national average of 25.16 percent. The higher the capital ratio, the better the bank will be able to stand up to economic difficulties.

Overall, Capital Community Bank held equity amounting to 9.08 percent of its assets, which was lower than the national average of 12.10 percent.

Asset Quality Score

Bankrate uses this test to determine the impact of problem assets, such as past-due loans, on the bank's capitalization and allocated loan loss reserves.

A bank with extensive holdings of these kinds of assets may eventually be required to use capital to absorb losses, shrinking its equity buffer. Many of those assets are also likely to be in non-accrual status and thus aren't earning money, pushing down earnings and increasing the risk of a failure in the future.

Capital Community Bank came in below the national average of 37.62 on Bankrate's test of asset quality, racking up 36 out of a possible 40 points .

A widely used indicator of asset quality is the percentage of problem assets a bank holds compared to its total assets. As of June 30, 2017, 0.84 percent of Capital Community 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 1.04 percent.

Banks maintain a reserve to handle troubled assets known as an "allowance for loan and lease losses." How large that reserve is can be a useful indicator when evaluating a bank's ability to manage problem assets, especially when compared to the total amount of at-risk loans. Unfortunately, the FDIC did not provide information on Capital Community Bank's loan loss allowance in its most recent filings.

Earnings score

A bank's ability to earn money affects its long-term survivability. A bank can retain its earnings, boosting its capital buffer, or use them to address problematic loans, likely making the bank more resilient in tough times. Losses, on the other hand, lessen a bank's ability to do those things.

On Bankrate's earnings test, Capital Community Bank scored 26 out of a possible 30, better than the national average of 16.52.

Return on equity, calculated by dividing net income (essentially, profit) by the total amount of equity, is one key measure of a bank's earnings. Capital Community Bank's most recent annualized quarterly return on equity was 19.65 percent, above the national average of 9.28 percent.

For the twelve months ended June 30, 2017, the bank reported net income of $2.8 million on total equity of $31.2 million. The bank had an annualized return on average assets, or ROA, of 1.76 percent, above the 1 percent deemed satisfactory in accordance with industry standards, and above 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.