Safe and Sound

Community Bank of the Bay

Oakland, CA
4
Star Rating
Founded in 1996, Community Bank of the Bay is an FDIC-insured bank headquartered in Oakland, CA. As of December 31, 2017, the bank had equity of $37.7 million on $295.7 million in assets.

U.S. bank customers have $257.2 million on deposit at 2 offices in CA run by 48 full-time employees. With that footprint, the bank has amassed loans and leases worth $234.5 million, including $186.2 million worth of real estate loans.

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

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THE INSTITUTION'S SCORE

Capital Score

Capital is an essential measurement of an institution's financial strength. It acts as a buffer against losses and provides protection for accountholders when a bank is struggling financially. When it comes to safety and soundness, more capital is better.

On our test to measure the adequacy of a bank's capital, Community Bank of the Bay racked up 16 out of a possible 30 points, beating out the national average of 13.13.

A bank's Tier 1 capital ratio is a widely followed measure of this buffer. Community Bank of the Bay's Tier 1 capital ratio was 13.82 percent, exceeding the 6 percent level considered adequate by regulators, but under the national average of 25.65 percent. The higher the capital ratio, the better the bank will be able to stand up to financial downturns.

Overall, Community Bank of the Bay held equity amounting to 12.75 percent of its assets, which exceeded the national average of 12.03 percent.

Asset Quality Score

In this test, Bankrate tries to determine the effect of troubled assets, such as past-due mortgages, on the bank's loan loss reserves and overall capitalization.

A bank with large numbers of these kinds of assets may eventually be forced to use capital to absorb losses, diminishing 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 reduced earnings and potentially more risk of a future failure.

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

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, 0.58 percent of Community Bank of the Bay'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 . How large that reserve is can be a widely used indicator when evaluating a bank's ability to manage problem assets, especially when compared to the total amount of problematic loans. Unfortunately, the FDIC did not provide information on Community Bank of the Bay's loan loss allowance in its most recent filings.

Earnings score

How profitable a bank is has an effect on its safety and soundness. A bank can retain its earnings, increasing its capital cushion, or put them to work addressing problematic loans, potentially making the bank better able to withstand economic shocks. Losses, on the other hand, lessen a bank's ability to do those things.

On Bankrate's earnings test, Community Bank of the Bay scored 8 out of a possible 30, less than the national average of 15.12.

One important way to measure a bank's earnings is return on equity, or net income (essentially profit) divided by total equity. The most recent annualized quarterly return on equity for Community Bank of the Bay was 3.52 percent, below the national average of 8.10 percent.

The bank earned net income of $1.2 million on total equity of $37.7 million for the twelve months ended December 31, 2017. The bank had an annualized return on average assets, or ROA, of 0.44 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.