Safe and Sound

Central Valley Community Bank

Fresno, CA
4
Star Rating
Central Valley Community Bank is a Fresno, CA-based, FDIC-insured bank that opened its doors in 1980. The bank holds equity of $210.7 million on assets of $1.66 billion, according to December 31, 2017, regulatory filings.

U.S. bank customers have $1.43 billion on deposit at 28 offices in CA run by 334 full-time employees. With that footprint, the bank has amassed loans and leases worth $891.9 million, including real estate loans of $753.8 million.

Overall, Bankrate believes that, as of December 31, 2017, Central Valley Community Bank exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Keep reading for an analysis of how the bank did on the three major criteria Bankrate used to grade U.S. banks.

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THE INSTITUTION'S SCORE

Capital Score

Capital acts as a cushion against losses and provides protection for account holders when a bank is struggling financially. It follows then that when it comes to measuring an a bank's financial fortitude, capital is important. When looking at safety and soundness, the more capital, the better.

On our test to measure capital adequacy, Central Valley Community Bank received a score of 10 out of a possible 30 points, coming in below the national average of 13.13.

One important measure of this buffer is a bank's Tier 1 capital ratio. Central Valley Community Bank's Tier 1 capital ratio was 12.96 percent, higher than the 6 percent level considered adequate by regulators, but less than the national average of 25.65 percent. The higher the capital ratio, the better the bank will be able to weather financial headwinds.

Overall, Central Valley Community Bank held equity amounting to 12.68 percent of its assets, which exceeded the national average of 12.03 percent.

Asset Quality Score

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

Having a large number of these kinds of assets means a bank could have to use capital to cover losses, shrinking its cushion of equity. 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 chances of a failure in the future.

Central Valley Community Bank scored 40 out of a possible 40 points on Bankrate's asset quality test, better than the national average of 37.49.

A useful indicator of asset quality is the percentage of problem assets a bank holds compared to its total assets. As of December 31, 2017, 0.32 percent of Central Valley 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 1.01 percent.

Banks keep a reserve to handle troubled assets known as an "allowance for loan and lease losses." The size of that reserve can be a useful indicator when evaluating a bank's ability to manage troubled assets, especially when compared to the total amount of at-risk loans. Unfortunately, the FDIC did not provide information on Central Valley Community Bank's loan loss allowance in its most recent filings.

Earnings score

How profitable a bank is has an effect on its safety and soundness. A bank can retain its earnings, giving a boost to its capital buffer, or use them to address problematic loans, likely making the bank more resilient in tough times. Losses, on the other hand, reduce a bank's ability to do those things.

On Bankrate's test of earnings, Central Valley Community Bank scored 16 out of a possible 30, beating the national average of 15.12.

Return on equity, calculated by dividing net income (profit, essentially) by the total amount of equity, is one important way to measure a bank's earnings. Central Valley Community Bank's most recent annualized quarterly return on equity was 8.11 percent, above the national average of 8.10 percent.

The bank recorded net income of $14.9 million on total equity of $210.7 million for the twelve months ended December 31, 2017. The bank had an annualized return on average assets, or ROA, of 1.00 percent, right at the level deemed satisfactory in accordance with industry standards, and equal to 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.