Safe and Sound

Commerce National Bank & Trust

Winter Park, FL
5
Star Rating
Winter Park, FL-based Commerce National Bank & Trust is an FDIC-insured bank founded in 2003. The bank has equity of $13.7 million on assets of $104.7 million, according to December 31, 2017, regulatory filings.

With 29 full-time employees, the bank has amassed loans and leases worth $87.0 million, including real estate loans of $82.5 million. U.S. bank customers currently have $86.6 million in deposits with the bank.

Overall, Bankrate believes that, as of December 31, 2017, Commerce National Bank & Trust 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 important criteria Bankrate used to score U.S. banks on safety and soundness.

WHAT IS
SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

Capital works as a bulwark against losses and affords protection for account holders when a bank is experiencing financial instability. It follows then that a bank's level of capital is an important measurement of a bank's financial resilience. When looking at safety and soundness, the more capital, the better.

On our test to measure capital adequacy, Commerce National Bank & Trust racked up 18 out of a possible 30 points, above the national average of 13.13.

One important measure of this buffer is a bank's Tier 1 capital ratio. Commerce National Bank & Trust's Tier 1 capital ratio was 16.66 percent, higher than the 6 percent level regulators consider adequate, but less than the national average of 25.65 percent. A higher capital ratio suggests the bank will be better able to stand up to financial headwinds.

Overall, Commerce National Bank & Trust held equity amounting to 13.08 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 past-due loans.

Having extensive holdings of these types of assets means a bank may have to use capital to absorb losses, reducing its equity cushion. 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.

Commerce National Bank & Trust scored 40 out of a possible 40 points on Bankrate's test of asset quality, better than the national average of 37.49.

The percentage of problem assets a bank holds compared to its total assets is a widely used indicator of asset quality.As of December 31, 2017, 0.59 percent of Commerce National Bank & Trust's loans were noncurrent, meaning 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 maintain a reserve to handle troubled assets known as an "allowance for loan and lease losses." The size of that reserve can be a helpful indicator when evaluating a bank's ability to manage troubled assets, especially when compared to the total amount of problem loans. Unfortunately, the FDIC did not provide information on Commerce National Bank & Trust's loan loss allowance in its most recent filings.

Earnings score

A bank's earnings performance affects its long-term survivability. A bank can retain its earnings, boosting its capital cushion, or use them to deal with problematic loans, likely making the bank better able to withstand financial trouble. Losses, on the other hand, lessen a bank's ability to do those things.

Commerce National Bank & Trust scored 24 out of a possible 30 on Bankrate's test of earnings, better than the national average of 15.12.

One important measure of a bank's earnings is return on equity, or net income (profit, essentially) divided by total equity. Commerce National Bank & Trust's most recent annualized quarterly return on equity was 16.19 percent, above the national average of 8.10 percent.

For the twelve months ended December 31, 2017, the bank reported net income of $2.1 million on total equity of $13.7 million. The bank reported an annualized return on average assets, or ROA, of 1.96 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.