Safe and Sound

CTBC Bank Corp. (USA)

Los Angeles, CA
4
Star Rating
Los Angeles, CA-based CTBC Bank Corp. (USA) is an FDIC-insured bank founded in 1965. Regulatory filings show the bank having equity of $443.1 million on assets of $3.24 billion, as of December 31, 2017.

With 311 full-time employees in 12 offices in multiple states, the bank holds loans and leases worth $2.63 billion, including real estate loans of $2.35 billion. U.S. bank customers currently have $2.72 billion in deposits with the bank.

Overall, Bankrate believes that, as of December 31, 2017, CTBC Bank Corp. (USA) exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Here's an analysis of how the bank fared on the three key criteria Bankrate used to score U.S. banks.

WHAT IS
SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

Capital acts as a buffer against losses and as protection for account holders when a bank is struggling financially. Therefore, a bank's level of capital is a key measurement of an institution's financial fortitude. When it comes to safety and soundness, more capital is preferred.

CTBC Bank Corp. (USA) exceeded the national average of 13.13 points on our test to measure capital adequacy, achieving a score of 18 out of a possible 30 points.

One widely followed measure of this buffer is a bank's Tier 1 capital ratio. CTBC Bank Corp. (USA)'s Tier 1 capital ratio was 16.76 percent, higher than the 6 percent level regulators consider adequate, but under the national average of 25.65 percent. The higher the capital ratio, the better the bank will be able to weather economic challenges.

Overall, CTBC Bank Corp. (USA) held equity amounting to 13.67 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 problem assets, such as unpaid loans, on the bank's reserves set aside to cover loan losses, as well as overall capitalization.

Having extensive holdings of these kinds of assets may eventually require a bank to use capital to cover 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 interest for the bank, reducing earnings and elevating the chances of a failure in the future.

CTBC Bank Corp. (USA) beat out the national average of 37.49 on Bankrate's test of asset quality, racking up 40 out of a possible 40 points .

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, 0.17 percent of CTBC Bank Corp. (USA)'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 keep a reserve to handle troubled assets known as an "allowance for loan and lease losses." The size of that reserve can be a handy indicator when evaluating a bank's ability to manage problem assets, especially when compared to the total amount of at-risk loans. Unfortunately, the FDIC did not provide information on CTBC Bank Corp. (USA)'s loan loss allowance in its most recent filings.

Earnings score

How profitable a bank is affects its safety and soundness. Earnings can be retained by the bank, expanding its capital buffer, or be used to deal with problematic loans, potentially making the bank more resilient in tough times. Losses, on the other hand, lessen a bank's ability to do those things.

CTBC Bank Corp. (USA) fell short of the national average on Bankrate's test of earnings, achieving a score of 6 out of a possible 30.

Return on equity, calculated by dividing net income (essentially, profit) by the total amount of equity, is one important way to measure a bank's earnings. CTBC Bank Corp. (USA)'s most recent annualized quarterly return on equity was 2.77 percent, below the national average of 8.10 percent.

For the twelve months ended December 31, 2017, the bank earned net income of $12.2 million on total equity of $443.1 million. The bank had an annualized return on average assets, or ROA, of 0.39 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.