Safe and Sound

Commercial Banking Company

Valdosta, GA
4
Star Rating
Valdosta, GA-based Commercial Banking Company is an FDIC-insured bank started in 1934. The bank has equity of $31.5 million on assets of $234.9 million, according to December 31, 2017, regulatory filings.

U.S. bank customers have $190.7 million on deposit at 5 offices in GA run by 59 full-time employees. With that footprint, the bank currently holds loans and leases worth $161.4 million, including $141.2 million worth of real estate loans.

Overall, Bankrate believes that, as of December 31, 2017, Commercial Banking Company exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Keep reading for a look at how the bank did on the three important criteria Bankrate used to grade U.S. banks.

WHAT IS
SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

Capital is a valuable measurement of an institution's financial fortitude. It acts as a bulwark against losses and provides protection for accountholders when a bank is struggling financially. When looking at safety and soundness, the more capital, the better.

Commercial Banking Company exceeded the national average of 13.13 points on our test to measure the adequacy of a bank's capital, achieving a score of 18 out of a possible 30 points.

One way to measure this buffer is looking at a bank's Tier 1 capital ratio. Commercial Banking Company's Tier 1 capital ratio was 21.16 percent, above the 6 percent level regulators consider adequate, but less than the national average of 25.65 percent. A higher capital ratio means the bank will be better able to weather financial challenges.

Overall, Commercial Banking Company held equity amounting to 13.43 percent of its assets, which exceeded the national average of 12.03 percent.

Asset Quality Score

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

A bank with lots of these kinds of assets may eventually be forced to use capital to absorb 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 money, diminishing earnings and increasing the chances of a failure in the future.

On Bankrate's test of asset quality, Commercial Banking Company scored 40 out of a possible 40 points, exceeding the national average of 37.49 points.

A handy indicator of asset quality is the percentage of problem assets a bank holds compared to its total assets. As of December 31, 2017, 0.33 percent of Commercial Banking Company'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 deal with troubled assets known as an "allowance for loan and lease losses." Comparing the reserve's size to the total amount of at-risk loans can be a handy indicator when evaluating a bank's ability to manage problem assets. Unfortunately, the FDIC did not provide information on Commercial Banking Company's loan loss allowance in its most recent filings.

Earnings score

How profitable a bank is has an effect on its long-term survivability. Earnings may be retained by the bank, giving a boost to its capital cushion, or be used to address problematic loans, likely making the bank better prepared to withstand economic trouble. Banks that are losing money, however, have less ability to do those things.

Commercial Banking Company scored 10 out of a possible 30 on Bankrate's test of earnings, lower than the national average of 15.12.

Return on equity, calculated by dividing net income (essentially, profit) by the total amount of equity, is one important measure of a bank's earnings. The most recent annualized quarterly return on equity for Commercial Banking Company was 5.01 percent, below the national average of 8.10 percent.

For the twelve months ended December 31, 2017, the bank recorded net income of $1.5 million on total equity of $31.5 million. The bank reported an annualized return on average assets, or ROA, of 0.66 percent, below the 1 percent deemed satisfactory in accordance with industry standards and below 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.