Safe and Sound

Capital Bank and Trust Company

Irvine, CA
5
Star Rating
Capital Bank and Trust Company is an FDIC-insured bank started in 2000 and currently based in Irvine, CA. As of December 31, 2017, the bank held equity of $94.5 million on assets of $179.0 million.

Thanks to the efforts of 310 full-time employees in 2 offices in multiple states, the bank currently holds loans and leases worth $0, including real estate loans of $0. The bank currently holds $500,000 in deposits from U.S. customers.

Overall, Bankrate believes that, as of December 31, 2017, Capital Bank and Trust Company exhibited a superior condition, earning a full 5 stars for safety and soundness. Here's a look at how the bank did on the three key 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 acts as a bulwark against losses and provides protection for account holders when a bank is struggling financially. Therefore, when it comes to measuring an an institution's financial resilience, capital is valuable. When looking at safety and soundness, more capital is better.

Capital Bank and Trust Company exceeded the national average of 13.13 points on our test to measure the adequacy of a bank's capital, achieving a score of 30 out of a possible 30 points.

One essential measure of this buffer is a bank's Tier 1 capital ratio. Capital Bank and Trust Company's Tier 1 capital ratio was 152.73 percent, higher than the 6 percent level considered adequate by regulators, and higher than the national average of 25.65 percent. A higher capital ratio means the bank will be better able to weather economic challenges.

Overall, Capital Bank and Trust Company held equity amounting to 52.81 percent of its assets, which exceeded the national average of 12.03 percent.

Asset Quality Score

Bankrate uses this test to determine the effect of problem 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 could eventually require a bank to use capital to cover losses, shrinking its equity buffer. 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 risk of a failure in the future.

Capital Bank and Trust Company scored above the national average of 37.49 on Bankrate's asset quality test, racking up 40 out of a possible 40 points .

A handy indicator of asset quality is the percentage of problem assets a bank holds compared to its total assets.

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

Earnings score

A bank's profitability has an effect on its long-term survivability. Earnings may be retained by the bank, giving a boost to its capital cushion, or be used to address problematic loans, potentially making the bank more resilient in times of trouble. Conversely, losses take away from a bank's ability to do those things.

Capital Bank and Trust Company scored 30 out of a possible 30 on Bankrate's test of earnings, beating out the national average of 15.12.

One key way to measure a bank's earnings is return on equity, or net income (profit, basically) divided by the total amount of equity. The most recent annualized quarterly return on equity for Capital Bank and Trust Company was 35.57 percent, above the national average of 8.10 percent.

For the twelve months ended December 31, 2017, the bank reported net income of $35.0 million on total equity of $94.5 million. The bank experienced an annualized return on average assets, or ROA, of 21.29 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.