Safe and Sound

Bank of the Cascades

Bend, OR
3
Star Rating
Bend, OR-based Bank of the Cascades is an FDIC-insured bank started in 1977. Regulatory filings show the bank having equity of $518.0 million on assets of $3.33 billion, as of June 30, 2017.

With 607 full-time employees in 53 offices in multiple states, the bank has amassed loans and leases worth $2.06 billion, including real estate loans of $1.65 billion. U.S. bank customers currently have $2.75 billion in deposits with the bank.

Overall, Bankrate believes that, as of June 30, 2017, Bank of the Cascades exhibited a generally satisfactory condition, earning 3 out of 5 stars for safety and soundness. Here's a look at how the bank faired on the three major criteria Bankrate used to evaluate American banks.

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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 affords protection for depositors during periods of economic trouble for the bank. When it comes to safety and soundness, more capital is better.
Bank of the Cascades fell short of the national average of 13.38 on our test to measure capital adequacy, achieving a score of 6 out of a possible 30 points.

One essential measure of this buffer is a bank's Tier 1 capital ratio. Bank of the Cascades's Tier 1 capital ratio was 10.53 percent, above the 6 percent level considered adequate by regulators, but under the national average of 25.16 percent. The higher the capital ratio, the better the bank will be able to weather financial headwinds.

Overall, Bank of the Cascades held equity amounting to 15.57 percent of its assets, which exceeded the national average of 12.10 percent.

Asset Quality Score

Bankrate uses this test to estimate the impact of troubled assets, such as unpaid mortgages, on the bank's reserves set aside to cover loan losses, as well as overall capitalization.

Having a large number of these kinds of assets may eventually require a bank to use capital to absorb losses, reducing its equity buffer. 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 reduced earnings and potentially more risk of a failure in the future.

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

The percentage of problem assets a bank holds compared to its total assets is a helpful indicator of asset quality.As of June 30, 2017, 0.16 percent of Bank of the Cascades'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 known as an "allowance for loan and lease losses" to deal with problem assets . 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 problem assets. Unfortunately, the FDIC did not provide information on Bank of the Cascades's loan loss allowance in its most recent filings.

Earnings score

How profitable a bank is affects its long-term survivability. Earnings can be retained by the bank, boosting its capital buffer, or be used to deal with problematic loans, likely making the bank better able to withstand financial shocks. Banks that are losing money, however, have less ability to do those things.

On Bankrate's earnings test, Bank of the Cascades scored 4 out of a possible 30, failing to reach the national average of 16.52.

Return on equity, calculated by dividing net income (profit, basically) by total equity, is one important way to measure a bank's earnings. Bank of the Cascades's most recent annualized quarterly return on equity was 1.47 percent, below the national average of 9.28 percent.

The bank recorded net income of $3.0 million on total equity of $518.0 million for the twelve months ended June 30, 2017. The bank had an annualized return on average assets, or ROA, of 0.19 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.