Safe and Sound

Bank of America California, National Association

San Francisco, CA
5
Star Rating
Bank of America California, National Association is an FDIC-insured bank started in 1984 and currently based in San Francisco, CA. The bank holds equity of $3.23 billion on assets of $19.80 billion, according to December 31, 2017, regulatory filings.

The bank has loans and leases worth $14.31 billion, including real estate loans of $14.38 billion. U.S. bank customers currently have $16.00 billion in deposits with the bank.

Overall, Bankrate believes that, as of December 31, 2017, Bank of America California, National Association exhibited a superior condition, earning a full 5 stars for safety and soundness. Here's a look at how the bank fared on the three key criteria Bankrate used to score U.S. 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 resilience, capital is crucial. It works as a cushion against losses and affords protection for accountholders when a bank is experiencing financial instability. From a safety and soundness perspective, the more capital, the better.

Bank of America California, National Association did better than the national average of 13.13 points on our test to measure capital adequacy, receiving a score of 24 out of a possible 30 points.

One widely used measure of this buffer is a bank's Tier 1 capital ratio. Bank of America California, National Association's Tier 1 capital ratio was 37.88 percent, higher than the 6 percent level considered adequate by regulators, and exceeding the national average of 25.65 percent. A higher capital ratio means the bank will be better able to stand up to financial challenges.

Overall, Bank of America California, National Association held equity amounting to 16.31 percent of its assets, which exceeded the national average of 12.03 percent.

Asset Quality Score

This test's purpose is to estimate how the bank's reserves set aside to cover loan losses, as well as overall capitalization, could be affected by troubled assets, such as past-due mortgages.

Having large numbers of these types of assets may eventually require a bank to use capital to absorb losses, shrinking its equity buffer. Many of those assets are also likely to be in non-accrual status and no longer earning money, decreasing earnings and increasing the chances of a future failure.

Bank of America California, National Association scored 40 out of a possible 40 points on Bankrate's asset quality test, above the national average of 37.49.

A handy indicator of asset quality is the percentage of problem assets a bank holds compared to its total assets. As of December 31, 2017, 1.41 percent of Bank of America California, National Association's loans were noncurrent, meaning they were more than 90 days past due or were in non-accrual status. That's above the national average of 1.01 percent.

Banks maintain a reserve to deal with problem assets known as an "allowance for loan and lease losses." The size of that reserve can be a widely used indicator when evaluating a bank's ability to manage troubled assets, especially when compared to the total amount of problem loans. Unfortunately, the FDIC did not provide information on Bank of America California, National Association's loan loss allowance in its most recent filings.

Earnings score

A bank's profitability has an effect on its safety and soundness. A bank can retain its earnings, giving a boost to its capital buffer, or put them to work addressing problematic loans, potentially making the bank more resilient in times of trouble. Losses, on the other hand, reduce a bank's ability to do those things.

On Bankrate's test of earnings, Bank of America California, National Association scored 18 out of a possible 30, better than the national average of 15.12.

Return on equity, calculated by dividing net income (profit, essentially) by total equity, is one important way to measure a bank's earnings. The most recent annualized quarterly return on equity for Bank of America California, National Association was 8.96 percent, above the national average of 8.10 percent.

For the twelve months ended December 31, 2017, the bank recorded net income of $292.0 million on total equity of $3.23 billion. The bank had an annualized return on average assets, or ROA, of 1.33 percent, above the 1 percent deemed satisfactory in accordance with industry standards, and above the average for U.S. banks of 1.00 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.