Safe and Sound

The Cape Cod Five Cents Savings Bank

Harwich Port, MA
4
Star Rating
The Cape Cod Five Cents Savings Bank is an FDIC-insured bank founded in 1855 and currently based in Harwich Port, MA. As of December 31, 2017, the bank held equity of $299.2 million on assets of $3.23 billion.

Thanks to the efforts of 504 full-time employees in 20 offices in MA, the bank has amassed loans and leases worth $2.64 billion, $2.52 billion of which are for real estate. The bank currently holds $2.65 billion in deposits from U.S. customers.

Overall, Bankrate believes that, as of December 31, 2017, The Cape Cod Five Cents Savings Bank exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Keep reading for an analysis of how the bank did on the three important criteria Bankrate used to evaluate U.S. banks.

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THE INSTITUTION'S SCORE

Capital Score

When it comes to measuring an an institution's financial stability, capital is important. It acts as a cushion against losses and as protection for accountholders when a bank is struggling financially. When it comes to safety and soundness, the more capital, the better.

On our test to measure capital adequacy, The Cape Cod Five Cents Savings Bank received a score of 10 out of a possible 30 points, failing to reach the national average of 13.13.

One important measure of this buffer is a bank's Tier 1 capital ratio. The Cape Cod Five Cents Savings Bank's Tier 1 capital ratio was 14.48 percent, higher than the 6 percent level considered adequate by regulators, but less than the national average of 25.65 percent. A higher capital ratio suggests the bank will be better able to weather financial difficulties.

Overall, The Cape Cod Five Cents Savings Bank held equity amounting to 9.27 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 reserves set aside to cover loan losses, as well as overall capitalization, could be affected by problem assets, such as unpaid mortgages.

Having lots of these kinds of assets means a bank could eventually have to use capital to absorb losses, reducing 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, resulting in diminished earnings and potentially more risk of a failure in the future.

The Cape Cod Five Cents Savings Bank beat out the national average of 37.49 on Bankrate's asset quality test, racking up 40 out of a possible 40 points .

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, 0.47 percent of The Cape Cod Five Cents Savings Bank'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 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 problem loans can be a helpful indicator when evaluating a bank's ability to manage troubled assets. Unfortunately, the FDIC did not provide information on The Cape Cod Five Cents Savings Bank's loan loss allowance in its most recent filings.

Earnings score

A bank's ability to earn money has an effect on its safety and soundness. A bank can retain its earnings, increasing its capital buffer, or put them to work addressing problematic loans, likely making the bank more resilient in times of trouble. Losses, on the other hand, lessen a bank's ability to do those things.

The Cape Cod Five Cents Savings Bank scored 14 out of a possible 30 on Bankrate's earnings test, less than the national average of 15.12.

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. The most recent annualized quarterly return on equity for The Cape Cod Five Cents Savings Bank was 7.20 percent, below the national average of 8.10 percent.

For the twelve months ended December 31, 2017, the bank reported net income of $20.9 million on total equity of $299.2 million. The bank experienced an annualized return on average assets, or ROA, of 0.66 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.