Safe and Sound

Commerce National Bank & Trust

Winter Park, FL
5
Star Rating
Started in 2003, Commerce National Bank & Trust is an FDIC-insured bank based in Winter Park, FL. As of June 30, 2017, the bank held equity of $12.8 million on assets of $112.0 million.

Thanks to the work of 29 full-time employees, the bank holds loans and leases worth $85.3 million, $80.3 million of which are for real estate. The bank currently holds $92.4 million in deposits from U.S. customers.

Overall, Bankrate believes that, as of June 30, 2017, Commerce National Bank & Trust exhibited a superior condition, earning a full 5 stars for safety and soundness. Here's a look at how the bank did on the three important criteria Bankrate used to grade U.S. banks on safety and soundness.

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THE INSTITUTION'S SCORE

Capital Score

Capital is a valuable measurement of an institution's financial resilience. It works as a buffer against losses and provides protection for accountholders during times of financial trouble for the bank. From a safety and soundness perspective, the more capital, the better.
Commerce National Bank & Trust exceeded the national average of 13.38 points on our test to measure the adequacy of a bank's capital, receiving a score of 14 out of a possible 30 points.

One commonly used measure of this buffer is a bank's Tier 1 capital ratio. Commerce National Bank & Trust's Tier 1 capital ratio was 15.28 percent, above the 6 percent level considered adequate by regulators, but below the national average of 25.16 percent. A higher capital ratio means the bank will be better able to stand up to financial challenges.

Overall, Commerce National Bank & Trust held equity amounting to 11.43 percent of its assets, which was lower than the national average of 12.10 percent.

Asset Quality Score

This test is intended to try to understand how the bank's capitalization and allocated loan loss reserves could be affected by problem assets, such as past-due mortgages.

Having extensive holdings of these kinds of assets suggests a bank may have to use capital to cover losses, reducing its cushion of equity. 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, pushing down earnings and increasing the risk of a future failure.

On Bankrate's asset quality test, Commerce National Bank & Trust scored 36 out of a possible 40 points, less than the national average of 37.62 points.

A handy indicator of asset quality is the percentage of problem assets a bank holds compared to its total assets. As of June 30, 2017, 0.92 percent of Commerce National Bank & Trust'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." Comparing the the size of that reserve to the total amount of problem loans can be a handy indicator when evaluating a bank's ability to manage troubled assets. Unfortunately, the FDIC did not provide information on Commerce National Bank & Trust's loan loss allowance in its most recent filings.

Earnings score

A bank's profitability affects its safety and soundness. A bank can retain its earnings, increasing its capital buffer, or use them to deal with problematic loans, likely making the bank more resilient in tough times. However, banks that are losing money have less ability to do those things.

Commerce National Bank & Trust scored 22 out of a possible 30 on Bankrate's earnings test, beating the national average of 16.52.

Return on equity, calculated by dividing net income (profit, basically) by total equity, is one important measure of a bank's earnings. The most recent annualized quarterly return on equity for Commerce National Bank & Trust was 14.38 percent, above the national average of 9.28 percent.

For the twelve months ended June 30, 2017, the bank recorded net income of $891,000 on total equity of $12.8 million. The bank had an annualized return on average assets, or ROA, of 1.68 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.