Safe and Sound

CenterPointe Community Bank

Hood River, OR
4
Star Rating
Hood River, OR-based CenterPointe Community Bank is an FDIC-insured bank started in 2007. The bank holds equity of $13.2 million on assets of $141.3 million, according to June 30, 2017, regulatory filings.

Thanks to the efforts of 24 full-time employees in 4 offices in multiple states, the bank has amassed loans and leases worth $96.3 million, $71.9 million of which are for real estate. U.S. bank customers currently have $127.6 million in deposits with the bank.

Overall, Bankrate believes that, as of June 30, 2017, CenterPointe Community Bank 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 important criteria Bankrate used to grade American banks.

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THE INSTITUTION'S SCORE

Capital Score

Capital works as a cushion against losses and as protection for accountholders when a bank is struggling financially. Therefore, a bank's level of capital is an essential measurement of an institution's financial strength. When it comes to safety and soundness, the higher the capital, the better.
On our test to measure capital adequacy, CenterPointe Community Bank received a score of 10 out of a possible 30 points, below the national average of 13.38.

One widely used measure of this buffer is a bank's Tier 1 capital ratio. CenterPointe Community Bank's Tier 1 capital ratio was 12.64 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 financial headwinds.

Overall, CenterPointe Community Bank held equity amounting to 9.32 percent of its assets, which was lower than the national average of 12.10 percent.

Asset Quality Score

In this test, Bankrate tries to determine the effect of troubled assets, such as unpaid mortgages, on the bank's reserves set aside to cover loan losses, as well as overall capitalization.

A bank with lots of these kinds of assets could eventually have to use capital to absorb 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 interest for the bank, resulting in depressed earnings and potentially more risk of a future failure.

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

A handy indicator of asset quality is the percentage of problem assets a bank holds compared to its total assets. As of June 30, 2017, 0.78 percent of CenterPointe Community 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 handle troubled assets known as an "allowance for loan and lease losses." Comparing the the size of that reserve to the total amount of at-risk loans can be a widely used indicator when evaluating a bank's ability to manage troubled assets. Unfortunately, the FDIC did not provide information on CenterPointe Community Bank's loan loss allowance in its most recent filings.

Earnings score

A bank's earnings performance has an effect on its safety and soundness. A bank can retain its earnings, giving a boost to its capital cushion, or put them to work addressing problematic loans, likely making the bank more resilient in times of trouble. Conversely, losses lessen a bank's ability to do those things.

CenterPointe Community Bank scored 14 out of a possible 30 on Bankrate's test of earnings, below the national average of 16.52.

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 CenterPointe Community Bank was 6.20 percent, below the national average of 9.28 percent.

For the twelve months ended June 30, 2017, the bank recorded net income of $398,000 on total equity of $13.2 million. The bank had an annualized return on average assets, or ROA, of 0.58 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.