Safe and Sound

CBT Bank

Clearfield, PA
4
Star Rating
Clearfield, PA-based CBT Bank is an FDIC-insured bank founded in 1902. Regulatory filings show the bank having equity of $57.4 million on assets of $496.2 million, as of June 30, 2017.

Thanks to the efforts of 132 full-time employees in 12 offices in PA, the bank currently holds loans and leases worth $385.1 million, including real estate loans of $305.8 million. U.S. bank customers currently have $432.0 million in deposits with the bank.

Overall, Bankrate believes that, as of June 30, 2017, CBT Bank exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Here's an analysis of how the bank faired on the three important criteria Bankrate used to grade American banks.

WHAT IS
SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

Capital works as a buffer against losses and provides protection for depositors when a bank is experiencing financial instability. It follows then that a bank's level of capital is a useful measurement of a bank's financial resilience. When it comes to safety and soundness, the more capital, the better.
CBT 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.

One commonly used measure of this buffer is a bank's Tier 1 capital ratio. CBT Bank's Tier 1 capital ratio was 13.40 percent, exceeding the 6 percent level considered adequate by regulators, but below the national average of 25.16 percent. The higher the capital ratio, the better the bank will be able to stand up to economic headwinds.

Overall, CBT Bank held equity amounting to 11.56 percent of its assets, which was lower than the national average of 12.10 percent.

Asset Quality Score

This test is intended to try to understand how the bank's reserves set aside to cover loan losses, as well as overall capitalization could be affected by problem assets, such as unpaid mortgages.

A bank with a large number of these types of assets could eventually be required to use capital to cover losses, cutting down on 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 interest for the bank, pushing down earnings and increasing the risk of a future failure.

CBT Bank exceeded the national average of 37.62 on Bankrate's asset quality test, racking up 40 out of a possible 40 points .

A widely used indicator of asset quality is the percentage of problem assets a bank holds compared to its total assets. As of June 30, 2017, 0.64 percent of CBT 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 maintain a reserve known as an "allowance for loan and lease losses" to deal with problem assets . Comparing the that reserve's size to the total amount of at-risk loans can be a helpful indicator when evaluating a bank's ability to manage problem assets. Unfortunately, the FDIC did not provide information on CBT Bank's loan loss allowance in its most recent filings.

Earnings score

A bank's earnings performance affects its safety and soundness. Earnings may be retained by the bank, expanding its capital buffer, or be used to address problematic loans, likely making the bank better prepared to withstand financial trouble. However, banks that are losing money are less able to do those things.

CBT Bank scored 12 out of a possible 30 on Bankrate's earnings test, lower than 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. CBT Bank's most recent annualized quarterly return on equity was 5.24 percent, below the national average of 9.28 percent.

For the twelve months ended June 30, 2017, the bank recorded net income of $1.5 million on total equity of $57.4 million. The bank had an annualized return on average assets, or ROA, of 0.61 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.