Safe and Sound

Coastal Commerce Bank

Houma, LA
5
Star Rating
Started in 1999, Coastal Commerce Bank is an FDIC-insured bank based in Houma, LA. As of December 31, 2017, the bank had equity of $43.9 million on assets of $458.5 million.

Thanks to the work of 94 full-time employees in 6 offices in LA, the bank currently holds loans and leases worth $344.9 million, $200.2 million of which are for real estate. U.S. bank customers currently have $391.1 million in deposits with the bank.

Overall, Bankrate believes that, as of December 31, 2017, Coastal Commerce Bank exhibited a superior condition, earning a full 5 stars for safety and soundness. Keep reading for a breakdown of how the bank did on the three key criteria Bankrate used to score U.S. banks on safety and soundness.

WHAT IS
SAFE AND SOUND?

Find out

THE INSTITUTION'S SCORE

Capital Score

Capital works as a buffer against losses and provides protection for depositors during times of economic instability for the bank. It follows then that when it comes to measuring an a bank's financial fortitude, capital is useful. From a safety and soundness perspective, more capital is better.

On our test to measure the adequacy of a bank's capital, Coastal Commerce Bank received a score of 10 out of a possible 30 points, lower than the national average of 13.13.

One essential measure of this buffer is a bank's Tier 1 capital ratio. Coastal Commerce Bank's Tier 1 capital ratio was 11.97 percent, above the 6 percent level regulators consider adequate, but below the national average of 25.65 percent. The higher the capital ratio, the better the bank will be able to stand up to economic headwinds.

Overall, Coastal Commerce Bank held equity amounting to 9.58 percent of its assets, which was lower than the national average of 12.03 percent.

Asset Quality Score

This test's purpose is to estimate how the bank's loan loss reserves and overall capitalization could be affected by problem assets, such as past-due mortgages.

Having large numbers of these types of assets could eventually force a bank to use capital to cover losses, decreasing 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 money, resulting in diminished earnings and potentially more risk of a failure in the future.

Coastal Commerce Bank scored 36 out of a possible 40 points on Bankrate's test of asset quality, falling short of the national average of 37.49.

A widely used indicator of asset quality is the percentage of problem assets a bank holds compared to its total assets. As of December 31, 2017, 1.07 percent of Coastal Commerce Bank's loans were noncurrent -- in other words, they were more than 90 days past due or were in non-accrual status. That's above the national average of 1.01 percent.

Banks maintain a reserve known as an "allowance for loan and lease losses" to deal with problem assets . Comparing the size of that reserve to the total amount of problem 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 Coastal Commerce Bank's loan loss allowance in its most recent filings.

Earnings score

A bank's earnings performance affects its safety and soundness. A bank can retain its earnings, expanding its capital buffer, or put them to work addressing problematic loans, potentially making the bank more resilient in tough times. Losses, on the other hand, reduce a bank's ability to do those things.

Coastal Commerce Bank scored 30 out of a possible 30 on Bankrate's earnings test, beating out the national average of 15.12.

One widely used measure of a bank's earnings is return on equity, or net income (profit, essentially) divided by total equity. The most recent annualized quarterly return on equity for Coastal Commerce Bank was 21.65 percent, above the national average of 8.10 percent.

The bank recorded net income of $9.5 million on total equity of $43.9 million for the twelve months ended December 31, 2017. The bank had an annualized return on average assets, or ROA, of 2.16 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.