Safe and Sound

Pacific West Bank

West Linn, OR
3
Star Rating
Pacific West Bank is a West Linn, OR-based, FDIC-insured bank started in 2004. Regulatory filings show the bank having equity of $9.1 million on $67.8 million in assets, as of December 31, 2017.

With 18 full-time employees in 2 offices in OR, the bank has amassed loans and leases worth $50.0 million, including real estate loans of $46.1 million. U.S. bank customers currently have $57.6 million in deposits with the bank.

Overall, Bankrate believes that, as of December 31, 2017, Pacific West Bank exhibited a generally satisfactory condition, earning 3 out of 5 stars for safety and soundness. Here's a breakdown of how the bank fared on the three important criteria Bankrate used to grade American banks.

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THE INSTITUTION'S SCORE

Capital Score

Capital is a valuable measurement of a bank's financial resilience. It works as a cushion against losses and as protection for depositors during times of financial trouble for the bank. From a safety and soundness perspective, more capital is better.

Pacific West Bank achieved a score of 18 out of a possible 30 points on our test to measure the adequacy of a bank's capital, beating out the national average of 13.13.

One commonly used measure of this buffer is a bank's Tier 1 capital ratio. Pacific West Bank's Tier 1 capital ratio was 14.08 percent, above the 6 percent level considered adequate by regulators, but under the national average of 25.65 percent. A higher capital ratio suggests the bank will be better able to weather economic downturns.

Overall, Pacific West Bank held equity amounting to 13.40 percent of its assets, which exceeded the national average of 12.03 percent.

Asset Quality Score

This test is intended to estimate how the bank's reserves set aside to cover loan losses, as well as overall capitalization, could be affected by troubled assets, such as unpaid loans.

A bank with extensive holdings of these types of assets may eventually be required to use capital to cover losses, diminishing its equity cushion. It also means that there are likely to be many assets that are in non-accrual status and thus aren't earning money, decreasing earnings and increasing the risk of a failure in the future.

Pacific West Bank 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 .

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, none of Pacific West 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 maintain 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 problematic loans can be a helpful indicator when evaluating a bank's ability to manage troubled assets. Unfortunately, the FDIC did not provide information on Pacific West Bank'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, increasing its capital cushion, or be used to address problematic loans, likely making the bank more resilient in times of trouble. Conversely, losses take away from a bank's ability to do those things.

Pacific West Bank received below-average marks on Bankrate's earnings test, achieving a score of 0 out of a possible 30.

One important 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 Pacific West Bank was -3.65 percent, below the national average of 8.10 percent.

The bank reported net income of $-345,000 on total equity of $9.1 million for the twelve months ended December 31, 2017. The bank experienced an annualized return on average assets, or ROA, of -0.51 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.