Safe and Sound

Coastal Community Bank

Everett, WA
5
Star Rating
Everett, WA-based Coastal Community Bank is an FDIC-insured bank founded in 1997. As of June 30, 2017, the bank held equity of $74.6 million on $737,897,000 in assets.

Thanks to the efforts of 149 full-time employees in 12 offices in WA, the bank currently holds loans and leases worth $615.3 million, $537.2 million of which are for real estate. U.S. bank customers currently have $643.4 million in deposits with the bank.

Overall, Bankrate believes that, as of June 30, 2017, Coastal Community Bank exhibited a superior condition, earning a full 5 stars for safety and soundness. Keep reading for a look at how the bank faired on the three important criteria Bankrate used to score U.S. banks on safety and soundness.

WHAT IS
SAFE AND SOUND?

Find out

THE INSTITUTION'S SCORE

Capital Score

Capital works as a buffer against losses and affords protection for accountholders when a bank is struggling financially. Therefore, when it comes to measuring an a bank's financial strength, capital is essential. From a safety and soundness perspective, the more capital, the better.
Coastal Community Bank fell short of the national average of 13.38 on our test to measure the adequacy of a bank's capital, achieving a score of 12 out of a possible 30 points.

One commonly used measure of this buffer is a bank's Tier 1 capital ratio. Coastal Community Bank's Tier 1 capital ratio was 11.77 percent, above the 6 percent level considered adequate by regulators, but below the national average of 25.16 percent. A higher capital ratio suggests the bank will be better able to weather financial downturns.

Overall, Coastal Community Bank held equity amounting to 10.11 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 unpaid mortgages, on the bank's reserves set aside to cover loan losses, as well as overall capitalization.

Having a large number of these types of assets means a bank could have to use capital to cover losses, diminishing 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 money, pushing down earnings and increasing the risk of a failure in the future.

On Bankrate's asset quality test, Coastal Community Bank scored 40 out of a possible 40 points, above the national average of 37.62 points.

A helpful indicator of asset quality is the percentage of problem assets a bank holds compared to its total assets. As of June 30, 2017, 0.38 percent of Coastal 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 keep a reserve known as an "allowance for loan and lease losses" to deal with problem assets . Comparing the that reserve's size to the total amount of problem 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 Coastal Community Bank's loan loss allowance in its most recent filings.

Earnings score

How profitable a bank is affects its long-term survivability. Earnings can be retained by the bank, increasing its capital cushion, or be used to address problematic loans, potentially making the bank more resilient in times of trouble. Obviously, banks that are losing money have less ability to do those things.

Coastal Community Bank scored 18 out of a possible 30 on Bankrate's test of earnings, above the national average of 16.52.

One key way to measure a bank's earnings is return on equity, calculated by dividing net income (profit, essentially) by total equity. The most recent annualized quarterly return on equity for Coastal Community Bank was 9.51 percent, above the national average of 9.28 percent.

The bank reported net income of $3.4 million on total equity of $74.6 million for the twelve months ended June 30, 2017. The bank had an annualized return on average assets, or ROA, of 0.92 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.