Safe and Sound

Canyon Community Bank, National Association

4
Star Rating
Tucson, AZ-based Canyon Community Bank, National Association is an FDIC-insured bank started in 2000. As of December 31, 2017, the bank had equity of $12.3 million on assets of $96.9 million.

U.S. bank customers have $82.9 million on deposit at 4 offices in AZ run by 25 full-time employees. With that footprint, the bank holds loans and leases worth $27.1 million, including $16.9 million worth of real estate loans.

Overall, Bankrate believes that, as of December 31, 2017, Canyon Community Bank, National Association exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Here's a breakdown of how the bank did on the three major criteria Bankrate used to evaluate American banks.

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THE INSTITUTION'S SCORE

Capital Score

When it comes to measuring an an institution's financial stability, capital is key. It acts as a buffer against losses and affords protection for depositors during periods of economic instability for the bank. When looking at safety and soundness, the more capital, the better.

Canyon Community Bank, National Association beat out the national average of 13.13 points on our test to measure the adequacy of a bank's capital, achieving a score of 16 out of a possible 30 points.

One way to measure this buffer is looking at a bank's Tier 1 capital ratio. Canyon Community Bank, National Association's Tier 1 capital ratio was 35.30 percent, higher than the 6 percent level considered adequate by regulators, and above the national average of 25.65 percent. The higher the capital ratio, the better the bank will be able to stand up to economic difficulties.

Overall, Canyon Community Bank, National Association held equity amounting to 12.70 percent of its assets, which exceeded the national average of 12.03 percent.

Asset Quality Score

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

Having lots of these types of assets suggests a bank may eventually have to use capital to absorb losses, cutting down on its buffer of equity. Many of those assets are also likely to be in non-accrual status and thus aren't earning interest for the bank, diminishing earnings and elevating the chances of a future failure.

On Bankrate's test of asset quality, Canyon Community Bank, National Association scored 40 out of a possible 40 points, beating out the national average of 37.49 points.

A helpful indicator of asset quality is the percentage of problem assets a bank holds compared to its total assets. As of December 31, 2017, none of Canyon Community Bank, National Association'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 1.01 percent.

Banks maintain a reserve to handle troubled assets known as an "allowance for loan and lease losses." Comparing the reserve's size to the total amount of problem loans can be a handy indicator when evaluating a bank's ability to manage problem assets. Unfortunately, the FDIC did not provide information on Canyon Community Bank, National Association's loan loss allowance in its most recent filings.

Earnings score

How profitable a bank is affects its long-term survivability. A bank can retain its earnings, increasing its capital cushion, or put them to work addressing problematic loans, potentially making the bank better able to withstand economic shocks. Obviously, banks that are losing money have less ability to do those things.

On Bankrate's earnings test, Canyon Community Bank, National Association scored 0 out of a possible 30, coming in below the national average of 15.12.

One widely used way to measure a bank's earnings is return on equity, or net income (essentially profit) divided by total equity. Canyon Community Bank, National Association's most recent annualized quarterly return on equity was -0.79 percent, below the national average of 8.10 percent.

For the twelve months ended December 31, 2017, the bank earned net income of $-97,000 on total equity of $12.3 million. The bank had an annualized return on average assets, or ROA, of -0.11 percent, below the 1 percent deemed satisfactory in accordance with industry standards and below 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.