Safe and Sound

The Columbia Bank

Columbia, MD
4
Star Rating
Columbia, MD-based The Columbia Bank is an FDIC-insured bank founded in 1988. The bank has equity of $318.5 million on $2,401,071,000 in assets, according to June 30, 2017, regulatory filings.

Thanks to the efforts of 234 full-time employees in 32 offices in MD, the bank holds loans and leases worth $1.78 billion, including $1.46 billion worth of real estate loans. U.S. bank customers currently have $1.86 billion in deposits with the bank.

Overall, Bankrate believes that, as of June 30, 2017, The Columbia Bank exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Here's a breakdown of how the bank faired on the three important criteria Bankrate used to score American banks.

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THE INSTITUTION'S SCORE

Capital Score

When it comes to measuring an an institution's financial resilience, capital is crucial. It works as a bulwark against losses and affords protection for depositors during times of financial instability for the bank. When it comes to safety and soundness, the higher the capital, the better.
The Columbia Bank finished below the national average of 13.38 on our test to measure the adequacy of a bank's capital, racking up 8 out of a possible 30 points.

One way to measure this buffer is looking at a bank's Tier 1 capital ratio. The Columbia Bank's Tier 1 capital ratio was 11.19 percent, higher than the 6 percent level regulators consider adequate, but under the national average of 25.16 percent. A higher capital ratio suggests the bank will be better able to weather financial headwinds.

Overall, The Columbia Bank held equity amounting to 13.26 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 loans.

Having large numbers of these kinds of assets could eventually force a bank to use capital to absorb losses, diminishing its equity cushion. Many of those assets are also likely to be in non-accrual status and thus aren't earning interest for the bank, resulting in lower earnings and potentially more risk of a failure in the future.

The Columbia Bank exceeded the national average of 37.62 on Bankrate's test of asset quality, racking up 40 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, 0.38 percent of The Columbia 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 to deal with troubled 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 useful indicator when evaluating a bank's ability to manage troubled assets. Unfortunately, the FDIC did not provide information on The Columbia Bank'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, expanding its capital buffer, or be used to deal with problematic loans, potentially making the bank more resilient in tough times. Banks that are losing money, however, have less ability to do those things.

The Columbia Bank received below-average marks on Bankrate's test of earnings, achieving a score of 16 out of a possible 30.

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. The Columbia Bank's most recent annualized quarterly return on equity was 7.39 percent, below the national average of 9.28 percent.

The bank earned net income of $11.3 million on total equity of $318.5 million for the twelve months ended June 30, 2017. The bank had an annualized return on average assets, or ROA, of 0.96 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.