Safe and Sound

Columbia Bank

Fair Lawn, NJ
4
Star Rating
Started in 1926, Columbia Bank is an FDIC-insured bank based in Fair Lawn, NJ. As of June 30, 2017, the bank held equity of $499.4 million on $5,348,514,000 in assets.

U.S. bank customers have $4.03 billion on deposit at 47 offices in NJ run by 597 full-time employees. With that footprint, the bank holds loans and leases worth $4.31 billion, $4.11 billion of which are for real estate.

Overall, Bankrate believes that, as of June 30, 2017, Columbia Bank exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Keep reading for a look at how the bank faired on the three important criteria Bankrate used to grade American banks.

WHAT IS
SAFE AND SOUND?

Find out

THE INSTITUTION'S SCORE

Capital Score

When it comes to measuring an a bank's financial strength, capital is useful. It works as a buffer against losses and affords protection for accountholders during periods of financial instability for the bank. When looking at safety and soundness, the more capital, the better.
Columbia Bank received a score of 10 out of a possible 30 points on our test to measure the adequacy of a bank's capital, lower than the national average of 13.38.

One widely used measure of this buffer is a bank's Tier 1 capital ratio. Columbia Bank's Tier 1 capital ratio was 13.69 percent, exceeding the 6 percent level considered adequate by regulators, but lower than the national average of 25.16 percent. A higher capital ratio means the bank will be better able to stand up to financial headwinds.

Overall, Columbia Bank held equity amounting to 9.34 percent of its assets, which was lower than the national average of 12.10 percent.

Asset Quality Score

In this test, Bankrate tries to determine the impact of troubled assets, such as unpaid loans, 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 may have to use capital to cover losses, shrinking its equity cushion. Many of those assets are also likely to be in non-accrual status and no longer earning money, pushing down earnings and increasing the risk of a future failure.

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

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, 0.21 percent of Columbia Bank'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 known as an "allowance for loan and lease losses" to deal with problem assets . Comparing the the size of that reserve to the total amount of at-risk loans can be a useful indicator when evaluating a bank's ability to manage troubled assets. Unfortunately, the FDIC did not provide information on Columbia Bank's loan loss allowance in its most recent filings.

Earnings score

A bank's profitability affects its long-term survivability. A bank can retain its earnings, giving a boost to its capital buffer, or use them to deal with problematic loans, likely making the bank better prepared to withstand economic shocks. Losses, on the other hand, lessen a bank's ability to do those things.

Columbia Bank outperformed the average on Bankrate's earnings test, achieving a score of 18 out of a possible 30.

Return on equity, calculated by dividing net income (profit, basically) by total equity, is one important way to measure a bank's earnings. Columbia Bank's most recent annualized quarterly return on equity was 8.60 percent, below the national average of 9.28 percent.

The bank recorded net income of $21.0 million on total equity of $499.4 million for the twelve months ended June 30, 2017. The bank had an annualized return on average assets, or ROA, of 0.80 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.