Safe and Sound

Community Bank Delaware

Lewes, DE
4
Star Rating
Community Bank Delaware is a Lewes, DE-based, FDIC-insured bank that opened its doors in 2006. Regulatory filings show the bank having equity of $18.8 million on $184.8 million in assets, as of December 31, 2017.

With 32 full-time employees in 2 offices in DE, the bank has amassed loans and leases worth $162.4 million, including real estate loans of $155.3 million. U.S. bank customers currently have $132.5 million in deposits with the bank.

Overall, Bankrate believes that, as of December 31, 2017, Community Bank Delaware exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Keep reading for an analysis of how the bank fared on the three important criteria Bankrate used to score American banks.

WHAT IS
SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

When it comes to measuring an a bank's financial fortitude, capital is valuable. It acts as a bulwark against losses and affords protection for depositors during times of economic trouble for the bank. From a safety and soundness perspective, more capital is better.

Community Bank Delaware came in below the national average of 13.13 on our test to measure capital adequacy, receiving a score of 12 out of a possible 30 points.

A bank's Tier 1 capital ratio is a widely followed measure of this buffer. Community Bank Delaware's Tier 1 capital ratio was 13.26 percent, higher than the 6 percent level regulators consider adequate, but lower than the national average of 25.65 percent. A higher capital ratio means the bank will be better able to weather financial challenges.

Overall, Community Bank Delaware held equity amounting to 10.17 percent of its assets, which was lower than the national average of 12.03 percent.

Asset Quality Score

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

A bank with a large number of these kinds of assets may eventually be required to use capital to absorb losses, shrinking its buffer 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, resulting in depressed earnings and potentially more risk of a failure in the future.

Community Bank Delaware did better than the national average of 37.49 on Bankrate's asset quality test, racking up 40 out of a possible 40 points .

The percentage of problem assets a bank holds compared to its total assets is a handy indicator of asset quality.As of December 31, 2017, 0.03 percent of Community Bank Delaware'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 known as an "allowance for loan and lease losses" to deal with problem assets . Comparing how large that reserve is to the total amount of at-risk loans can be a helpful indicator when evaluating a bank's ability to manage problem assets. Community Bank Delaware's loan loss allowance was 4,093.62 percent of its total noncurrent loans, higher than the national average. All things being equal, a higher ratio of loan loss allowance to noncurrent loans is better.

Earnings score

A bank's profitability affects its safety and soundness. A bank can retain its earnings, giving a boost to its capital cushion, or use them to address problematic loans, potentially making the bank more resilient in times of trouble. Conversely, losses reduce a bank's ability to do those things.

Community Bank Delaware received below-average marks on Bankrate's earnings test, achieving a score of 14 out of a possible 30.

One widely used measure of a bank's earnings is return on equity, or net income (profit, essentially) divided by the total amount of equity. The most recent annualized quarterly return on equity for Community Bank Delaware was 6.44 percent, below the national average of 8.10 percent.

The bank earned net income of $1.2 million on total equity of $18.8 million for the twelve months ended December 31, 2017. The bank reported an annualized return on average assets, or ROA, of 0.68 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.