Safe and Sound

Community 1st Bank

Auburn, CA
4
Star Rating
Founded in 2006, Community 1st Bank is an FDIC-insured bank based in Auburn, CA. The bank holds equity of $33.5 million on assets of $390.3 million, according to June 30, 2017, regulatory filings.

U.S. bank customers have $356.2 million on deposit at 3 offices in CA run by 42 full-time employees. With that footprint, the bank holds loans and leases worth $217.3 million, $194.3 million of which are for real estate.

Overall, Bankrate believes that, as of June 30, 2017, Community 1st Bank exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Here's a look at how the bank did on the three key criteria Bankrate used to grade American banks.

WHAT IS
SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

Capital works as a bulwark against losses and provides protection for accountholders during times of financial trouble for the bank. Therefore, when it comes to measuring an an institution's financial stability, capital is useful. When it comes to safety and soundness, the higher the capital, the better.
Community 1st Bank finished below the national average of 13.38 on our test to measure capital adequacy, scoring 8 out of a possible 30 points.

A bank's Tier 1 capital ratio is a widely followed measure of this buffer. Community 1st Bank's Tier 1 capital ratio was 13.55 percent, exceeding the 6 percent level considered adequate by regulators, but under the national average of 25.16 percent. A higher capital ratio suggests the bank will be better able to stand up to financial downturns.

Overall, Community 1st Bank held equity amounting to 8.59 percent of its assets, which was lower than the national average of 12.10 percent.

Asset Quality Score

This test is intended to estimate how the bank's reserves set aside to cover loan losses, as well as overall capitalization could be affected by troubled assets, such as unpaid mortgages.

Having lots of these kinds of assets may eventually require a bank to use capital to cover losses, reducing its equity buffer. Many of those assets are also likely to be in non-accrual status and no longer earning interest for the bank, resulting in lower earnings and potentially more risk of a future failure.

On Bankrate's test of asset quality, Community 1st Bank scored 40 out of a possible 40 points, better than 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, 0.12 percent of Community 1st Bank'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 1.04 percent.

Banks maintain a reserve known as an "allowance for loan and lease losses" to deal with problem assets . Comparing the the size of that reserve to the total amount of problematic loans can be a helpful indicator when evaluating a bank's ability to manage troubled assets. Community 1st Bank's loan loss allowance was 1,210.94 percent of its total noncurrent loans, higher than the national average. All else being equal, a higher ratio of loan loss allowance to noncurrent loans is better.

Earnings score

A bank's ability to earn money affects its long-term survivability. Earnings may be retained by the bank, expanding its capital buffer, or be used to address problematic loans, potentially making the bank better able to withstand economic trouble. Conversely, losses take away from a bank's ability to do those things.

Community 1st Bank received below-average marks on Bankrate's test of earnings, achieving a score of 16 out of a possible 30.

One widely used measure of a bank's earnings is return on equity, calculated by dividing net income (essentially profit) by the total amount of equity. The most recent annualized quarterly return on equity for Community 1st Bank was 7.57 percent, below the national average of 9.28 percent.

The bank reported net income of $1.2 million on total equity of $33.5 million for the twelve months ended June 30, 2017. The bank reported an annualized return on average assets, or ROA, of 0.65 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.