Safe and Sound

Verus Bank of Commerce

Fort Collins, CO
5
Star Rating
Verus Bank of Commerce is an FDIC-insured bank started in 2005 and currently headquartered in Fort Collins, CO. As of June 30, 2017, the bank had equity of $35.1 million on $248,669,000 in assets.

With 16 full-time employees, the bank holds loans and leases worth $220.1 million, including real estate loans of $212.6 million. U.S. bank customers currently have $186.3 million in deposits with the bank.

Overall, Bankrate believes that, as of June 30, 2017, Verus Bank of Commerce exhibited a superior condition, earning a full 5 stars for safety and soundness. Here's a breakdown of how the bank did on the three key criteria Bankrate used to score American banks on safety and soundness.

WHAT IS
SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

When it comes to measuring an a bank's financial fortitude, capital is useful. It works as a bulwark against losses and affords protection for depositors when a bank is experiencing financial trouble. When looking at safety and soundness, the higher the capital, the better.
On our test to measure capital adequacy, Verus Bank of Commerce scored 20 out of a possible 30 points, beating out the national average of 13.38.

One essential measure of this buffer is a bank's Tier 1 capital ratio. Verus Bank of Commerce's Tier 1 capital ratio was 15.37 percent, exceeding the 6 percent level considered adequate by regulators, but below the national average of 25.16 percent. The higher the capital ratio, the better the bank will be able to stand up to financial downturns.

Overall, Verus Bank of Commerce held equity amounting to 14.11 percent of its assets, which exceeded the national average of 12.10 percent.

Asset Quality Score

This test's purpose is to estimate how the bank's capitalization and allocated loan loss reserves could be affected by troubled assets, such as past-due loans.

A bank with large numbers of these kinds of assets could eventually be forced to use capital to cover losses, reducing its buffer of equity. It also means that there are likely to be many assets that are in non-accrual status and thus aren't earning money, resulting in depressed earnings and potentially more risk of a failure in the future.

Verus Bank of Commerce did better than the national average of 37.62 on Bankrate's asset quality test, racking up 40 out of a possible 40 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, 0.04 percent of Verus Bank of Commerce'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 known as an "allowance for loan and lease losses" to deal with problem assets . How large that reserve is can be a widely used indicator when evaluating a bank's ability to manage problem assets, especially when compared to the total amount of problem loans. Verus Bank of Commerce's loan loss allowance was 2,008.42 percent of its total noncurrent loans, above the national average. All things being equal, a higher ratio of loan loss allowance to noncurrent loans is better.

Earnings score

A bank's ability to earn money affects 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 better able to withstand economic shocks. Conversely, losses lessen a bank's ability to do those things.

On Bankrate's earnings test, Verus Bank of Commerce scored 20 out of a possible 30, exceeding the national average of 16.52.

One important measure of a bank's earnings is return on equity, or net income (essentially profit) divided by total equity. The most recent annualized quarterly return on equity for Verus Bank of Commerce was 11.99 percent, above the national average of 9.28 percent.

The bank reported net income of $2.0 million on total equity of $35.1 million for the twelve months ended June 30, 2017. The bank reported an annualized return on average assets, or ROA, of 1.63 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.