Safe and Sound

Palm Beach Community Bank

West Palm Beach, FL
4
Star Rating
Started in 2008, Palm Beach Community Bank is an FDIC-insured bank headquartered in West Palm Beach, FL. As of June 30, 2017, the bank held equity of $40.6 million on assets of $334.5 million.

With 46 full-time employees in 4 offices in FL, the bank currently holds loans and leases worth $273.7 million, including real estate loans of $234.6 million. U.S. bank customers currently have $280.4 million in deposits with the bank.

Overall, Bankrate believes that, as of June 30, 2017, Palm Beach Community Bank exhibited a superior condition, earning a full 5 stars for safety and soundness. Keep reading for a look at how the bank faired on the three important criteria Bankrate used to evaluate U.S. banks on safety and soundness.

WHAT IS
SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

Capital acts as a bulwark against losses and provides protection for accountholders when a bank is experiencing economic instability. Therefore, a bank's level of capital is a valuable measurement of a bank's financial resilience. From a safety and soundness perspective, more capital is preferred.
On our test to measure the adequacy of a bank's capital, Palm Beach Community Bank scored 16 out of a possible 30 points, beating the national average of 13.38.

A bank's Tier 1 capital ratio is an important measure of this buffer. Palm Beach Community Bank's Tier 1 capital ratio was 16.56 percent, higher than the 6 percent level regulators consider adequate, but under the national average of 25.16 percent. A higher capital ratio means the bank will be better able to weather financial difficulties.

Overall, Palm Beach Community Bank held equity amounting to 12.13 percent of its assets, which exceeded the national average of 12.10 percent.

Asset Quality Score

Bankrate uses this test to estimate the impact of problem assets, such as past-due mortgages, on the bank's loan loss reserves and overall capitalization.

A bank with lots of these kinds of assets may eventually have 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 interest for the bank, resulting in reduced earnings and potentially more risk of a future failure.

Palm Beach Community Bank fell short of the national average of 37.62 on Bankrate's test of asset quality, racking up 36 out of a possible 40 points .

A handy indicator of asset quality is the percentage of problem assets a bank holds compared to its total assets. As of June 30, 2017, 1.73 percent of Palm Beach Community Bank's loans were noncurrent -- in other words, they were more than 90 days past due or were in non-accrual status. That's above the national average of 1.04 percent.

Banks keep a reserve known as an "allowance for loan and lease losses" to deal with troubled assets . Comparing the how large that reserve is to the total amount of problem loans can be a widely used indicator when evaluating a bank's ability to manage problem assets. Unfortunately, the FDIC did not provide information on Palm Beach Community Bank's loan loss allowance in its most recent filings.

Earnings score

How profitable a bank is has an effect on its long-term survivability. Earnings may be retained by the bank, giving a boost to its capital buffer, or be used to deal with problematic loans, potentially making the bank better able to withstand economic shocks. Obviously, banks that are losing money have less ability to do those things.

On Bankrate's earnings test, Palm Beach Community Bank scored 18 out of a possible 30, better than the national average of 16.52.

Return on equity, calculated by dividing net income (profit, essentially) by total equity, is one important way to measure a bank's earnings. Palm Beach Community Bank's most recent annualized quarterly return on equity was 9.55 percent, above the national average of 9.28 percent.

For the twelve months ended June 30, 2017, the bank reported net income of $2.0 million on total equity of $40.6 million. The bank had an annualized return on average assets, or ROA, of 1.16 percent, above the 1 percent deemed satisfactory in accordance with industry standards, and above the average for U.S. banks of 1.14 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.