Safe and Sound

First Commercial Bank (USA)

Alhambra, CA
5
Star Rating
Alhambra, CA-based First Commercial Bank (USA) is an FDIC-insured bank founded in 1997. As of December 31, 2017, the bank had equity of $117.5 million on assets of $524.3 million.

With 75 full-time employees in 6 offices in CA, the bank holds loans and leases worth $474.5 million, including real estate loans of $372.6 million. U.S. bank customers currently have $405.1 million in deposits with the bank.

Overall, Bankrate believes that, as of December 31, 2017, First Commercial Bank (USA) exhibited a superior condition, earning a full 5 stars for safety and soundness. Here's a look at how the bank did on the three key criteria Bankrate used to score U.S. banks on safety and soundness.

WHAT IS
SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

Capital is an essential measurement of a bank's financial resilience. It acts as a cushion against losses and as protection for depositors when a bank is experiencing financial instability. From a safety and soundness perspective, the higher the capital, the better.

First Commercial Bank (USA) did better than the national average of 13.13 points on our test to measure capital adequacy, receiving a score of 30 out of a possible 30 points.

One widely used measure of this buffer is a bank's Tier 1 capital ratio. First Commercial Bank (USA)'s Tier 1 capital ratio was 24.83 percent, above the 6 percent level considered adequate by regulators, but lower than the national average of 25.65 percent. The higher the capital ratio, the better the bank will be able to stand up to financial difficulties.

Overall, First Commercial Bank (USA) held equity amounting to 22.40 percent of its assets, which exceeded the national average of 12.03 percent.

Asset Quality Score

Bankrate uses this test to estimate the effect of problem assets, such as unpaid loans, on the bank's capitalization and allocated loan loss reserves.

Having large numbers of these kinds of assets could eventually force a bank to use capital to absorb losses, reducing its buffer of equity. It also means that there are likely to be many assets that are in non-accrual status and no longer earning money, pushing down earnings and elevating the chances of a failure in the future.

First Commercial Bank (USA) scored 40 out of a possible 40 points on Bankrate's test of asset quality, beating out the national average of 37.49.

A useful indicator of asset quality is the percentage of problem assets a bank holds compared to its total assets. As of December 31, 2017, none of First Commercial Bank (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 maintain a reserve known as an "allowance for loan and lease losses" to deal with problem assets . The size of that reserve can be a useful 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 First Commercial Bank (USA)'s loan loss allowance in its most recent filings.

Earnings score

How profitable a bank is affects its long-term survivability. Earnings may be retained by the bank, boosting its capital cushion, or be used to deal with problematic loans, potentially making the bank better prepared to withstand financial shocks. Losses, on the other hand, diminish a bank's ability to do those things.

On Bankrate's earnings test, First Commercial Bank (USA) scored 10 out of a possible 30, lower than the national average of 15.12.

Return on equity, calculated by dividing net income (profit, basically) by total equity, is one widely used measure of a bank's earnings. First Commercial Bank (USA)'s most recent annualized quarterly return on equity was 5.04 percent, below the national average of 8.10 percent.

The bank earned net income of $5.8 million on total equity of $117.5 million for the twelve months ended December 31, 2017. The bank had an annualized return on average assets, or ROA, of 1.11 percent, above the 1 percent deemed satisfactory in accordance with industry standards, and above 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.