Safe and Sound

1st Bank of Sea Isle City

Sea Isle City, NJ
3
Star Rating
Started in 1882, 1st Bank of Sea Isle City is an FDIC-insured bank headquartered in Sea Isle City, NJ. Regulatory filings show the bank having equity of $25.1 million on assets of $246.0 million, as of June 30, 2017.

With 42 full-time employees in 3 offices in NJ, the bank currently holds loans and leases worth $165.9 million, including real estate loans of $165.8 million. U.S. bank customers currently have $215.7 million in deposits with the bank.

Overall, Bankrate believes that, as of June 30, 2017, 1st Bank of Sea Isle City exhibited a generally satisfactory condition, earning 3 out of 5 stars for safety and soundness. Here's a look at how the bank faired on the three key criteria Bankrate used to score American banks.

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THE INSTITUTION'S SCORE

Capital Score

When it comes to measuring an an institution's financial stability, capital is crucial. It works as a buffer against losses and affords protection for depositors when a bank is struggling financially. From a safety and soundness perspective, the more capital, the better.
1st Bank of Sea Isle City received a score of 12 out of a possible 30 points on our test to measure the adequacy of a bank's capital, below the national average of 13.38.

A bank's Tier 1 capital ratio is a widely used measure of this buffer. 1st Bank of Sea Isle City's Tier 1 capital ratio was 18.06 percent, above the 6 percent level considered adequate by regulators, but under the national average of 25.16 percent. The higher the capital ratio, the better the bank will be able to weather financial difficulties.

Overall, 1st Bank of Sea Isle City held equity amounting to 10.19 percent of its assets, which was lower than the national average of 12.10 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 problem assets, such as past-due mortgages.

Having extensive holdings of these types of assets could eventually require a bank to use capital to absorb losses, diminishing 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.

1st Bank of Sea Isle City scored 36 out of a possible 40 points on Bankrate's test of asset quality, less than the national average of 37.62.

A helpful indicator of asset quality is the percentage of problem assets a bank holds compared to its total assets. As of June 30, 2017, 1.08 percent of 1st Bank of Sea Isle City'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 maintain a reserve to deal with troubled assets known as an "allowance for loan and lease losses." Comparing the the size of that reserve to the total amount of problem loans can be a handy indicator when evaluating a bank's ability to manage problem assets. Unfortunately, the FDIC did not provide information on 1st Bank of Sea Isle City's loan loss allowance in its most recent filings.

Earnings score

How profitable a bank is affects its safety and soundness. Earnings may be retained by the bank, increasing its capital buffer, or be used to deal with problematic loans, potentially making the bank more resilient in tough times. Banks that are losing money, however, are less able to do those things.

1st Bank of Sea Isle City scored 6 out of a possible 30 on Bankrate's test of earnings, less than the national average of 16.52.

One important measure of a bank's earnings is return on equity, calculated by dividing net income (profit, basically) by the total amount of equity. The most recent annualized quarterly return on equity for 1st Bank of Sea Isle City was 2.77 percent, below the national average of 9.28 percent.

For the twelve months ended June 30, 2017, the bank recorded net income of $344,000 on total equity of $25.1 million. The bank reported an annualized return on average assets, or ROA, of 0.28 percent, below the 1 percent deemed satisfactory in accordance with industry standards and below 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.