Safe and Sound

California United Bank

Los Angeles, CA
4
Star Rating
Started in 2005, California United Bank is an FDIC-insured bank based in Los Angeles, CA. Regulatory filings show the bank having equity of $360.8 million on $3,038,553,000 in assets, as of June 30, 2017.

With 280 full-time employees in 10 offices in CA, the bank holds loans and leases worth $2.13 billion, including real estate loans of $1.61 billion. U.S. bank customers currently have $2.65 billion in deposits with the bank.

Overall, Bankrate believes that, as of June 30, 2017, California United Bank exhibited a superior condition, earning a full 5 stars for safety and soundness. Keep reading for an analysis of how the bank faired on the three important criteria Bankrate used to evaluate American banks on safety and soundness.

WHAT IS
SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

Capital is an important measurement of an institution's financial strength. It acts as a cushion against losses and as protection for accountholders when a bank is experiencing financial trouble. When looking at safety and soundness, the higher the capital, the better.
California United Bank received a score of 10 out of a possible 30 points on our test to measure the adequacy of a bank's capital, falling short of the national average of 13.38.

A bank's Tier 1 capital ratio is an important measure of this buffer. California United Bank's Tier 1 capital ratio was 10.64 percent, above the 6 percent level regulators consider adequate, but lower than the national average of 25.16 percent. A higher capital ratio means the bank will be better able to weather economic difficulties.

Overall, California United Bank held equity amounting to 11.87 percent of its assets, which was lower than the national average of 12.10 percent.

Asset Quality Score

This test is intended to estimate how the bank's loan loss reserves and overall capitalization could be affected by troubled assets, such as unpaid loans.

Having lots of these kinds of assets means a bank could eventually have to use capital to cover losses, diminishing its equity buffer. It also means that there are likely to be many assets that are in non-accrual status and no longer earning money, diminishing earnings and elevating the risk of a future failure.

On Bankrate's asset quality test, California United Bank scored 40 out of a possible 40 points, beating out 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, 0.03 percent of California United Bank's loans were noncurrent -- in other words, 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 that reserve's size to the total amount of problem loans can be a useful indicator when evaluating a bank's ability to manage troubled assets. California United Bank's loan loss allowance was 2,799.72 percent of its total noncurrent loans, higher than the national average. All things being equal, the higher the ratio of loan loss allowance to noncurrent loans, the better.

Earnings score

How profitable a bank is affects its long-term survivability. A bank can retain its earnings, giving a boost to its capital cushion, or use them to address problematic loans, likely making the bank better able to withstand economic shocks. Losses, on the other hand, lessen a bank's ability to do those things.

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

Return on equity, calculated by dividing net income (essentially, profit) by the total amount of equity, is one important way to measure a bank's earnings. California United Bank's most recent annualized quarterly return on equity was 10.46 percent, above the national average of 9.28 percent.

The bank reported net income of $18.3 million on total equity of $360.8 million for the twelve months ended June 30, 2017. The bank had an annualized return on average assets, or ROA, of 1.20 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.