Safe and Sound

Pacific Coast Bankers' Bank

Walnut Creek, CA
4
Star Rating
Founded in 1997, Pacific Coast Bankers' Bank is an FDIC-insured bank headquartered in Walnut Creek, CA. The bank holds equity of $68.0 million on $823.6 million in assets, according to December 31, 2017, regulatory filings.

With 94 full-time employees, the bank holds loans and leases worth $314.4 million, including real estate loans of $276.7 million. U.S. bank customers currently have $654.6 million in deposits with the bank.

Overall, Bankrate believes that, as of December 31, 2017, Pacific Coast Bankers' Bank exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Keep reading for a look at how the bank did 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 is a useful measurement of an institution's financial resilience. It acts as a buffer against losses and affords protection for depositors when a bank is experiencing financial instability. When looking at safety and soundness, more capital is preferred.

Pacific Coast Bankers' Bank finished below the national average of 13.13 on our test to measure the adequacy of a bank's capital, racking up 8 out of a possible 30 points.

One widely used measure of this buffer is a bank's Tier 1 capital ratio. Pacific Coast Bankers' Bank's Tier 1 capital ratio was 17.01 percent, exceeding the 6 percent level regulators consider adequate, but less than the national average of 25.65 percent. A higher capital ratio suggests the bank will be better able to stand up to economic challenges.

Overall, Pacific Coast Bankers' Bank held equity amounting to 8.26 percent of its assets, which was lower than the national average of 12.03 percent.

Asset Quality Score

This test's purpose is to estimate how the bank's loan loss reserves and overall capitalization could be affected by troubled assets, such as past-due loans.

Having extensive holdings of these kinds of assets could eventually require a bank to use capital to cover losses, cutting down on its equity cushion. Many of those assets are also likely to be in non-accrual status and no longer earning money, resulting in lower earnings and potentially more risk of a future failure.

Pacific Coast Bankers' Bank scored 40 out of a possible 40 points on Bankrate's asset quality test, exceeding the national average of 37.49.

A helpful indicator of asset quality is the percentage of problem assets a bank holds compared to its total assets. As of December 31, 2017, 0.18 percent of Pacific Coast Bankers' Bank'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 troubled assets . Comparing the size of that reserve to the total amount of at-risk loans can be a handy indicator when evaluating a bank's ability to manage troubled assets. Unfortunately, the FDIC did not provide information on Pacific Coast Bankers' Bank's loan loss allowance in its most recent filings.

Earnings score

A bank's profitability has an effect on its safety and soundness. Earnings can be retained by the bank, giving a boost to its capital cushion, or be used to address problematic loans, potentially making the bank better able to withstand financial shocks. However, banks that are losing money have less ability to do those things.

Pacific Coast Bankers' Bank scored 14 out of a possible 30 on Bankrate's test of earnings, failing to reach the national average of 15.12.

Return on equity, calculated by dividing net income (profit, essentially) by the total amount of equity, is one important measure of a bank's earnings. Pacific Coast Bankers' Bank's most recent annualized quarterly return on equity was 6.54 percent, below the national average of 8.10 percent.

For the twelve months ended December 31, 2017, the bank recorded net income of $4.5 million on total equity of $68.0 million. The bank experienced an annualized return on average assets, or ROA, of 0.57 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.