Safe and Sound

Charlotte State Bank & Trust

Port Charlotte, FL
5
Star Rating
Charlotte State Bank & Trust is a Port Charlotte, FL-based, FDIC-insured bank that opened its doors in 1987. The bank holds equity of $31.0 million on $359,002,000 in assets, according to June 30, 2017, regulatory filings.

With 88 full-time employees in 7 offices in FL, the bank currently holds loans and leases worth $187.4 million, including real estate loans of $189.3 million. U.S. bank customers currently have $324.9 million in deposits with the bank.

Overall, Bankrate believes that, as of June 30, 2017, Charlotte State Bank & Trust exhibited a superior condition, earning a full 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 on safety and soundness.

WHAT IS
SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

When it comes to measuring an an institution's financial fortitude, capital is useful. It acts as a buffer against losses and provides protection for accountholders when a bank is struggling financially. When looking at safety and soundness, more capital is better.
Charlotte State Bank & Trust fell below the national average of 13.38 on our test to measure capital adequacy, scoring 8 out of a possible 30 points.

One commonly used measure of this buffer is a bank's Tier 1 capital ratio. Charlotte State Bank & Trust's Tier 1 capital ratio was 16.07 percent, above the 6 percent level regulators consider adequate, but lower than the national average of 25.16 percent. A higher capital ratio means the bank will be better able to weather financial difficulties.

Overall, Charlotte State Bank & Trust held equity amounting to 8.64 percent of its assets, which was lower than the national average of 12.10 percent.

Asset Quality Score

Bankrate uses this test to determine the effect of problem assets, such as unpaid mortgages, on the bank's loan loss reserves and overall capitalization.

Having lots of these kinds of assets may eventually require a bank to use capital to absorb 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, resulting in lower earnings and potentially more risk of a future failure.

Charlotte State Bank & Trust finished below the national average of 37.62 on Bankrate's test of asset quality, racking up 36 out of a possible 40 points .

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, 1.26 percent of Charlotte State Bank & Trust's loans were noncurrent, meaning 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 problem assets . Comparing the that reserve's size to the total amount of at-risk loans can be a widely used indicator when evaluating a bank's ability to manage troubled assets. Unfortunately, the FDIC did not provide information on Charlotte State Bank & Trust's loan loss allowance in its most recent filings.

Earnings score

How profitable a bank is has an effect on its long-term survivability. 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. However, banks that are losing money are less able to do those things.

On Bankrate's earnings test, Charlotte State Bank & Trust scored 28 out of a possible 30, beating out the national average of 16.52.

One widely used measure of a bank's earnings is return on equity, calculated by dividing net income (profit, basically) by total equity. Charlotte State Bank & Trust's most recent annualized quarterly return on equity was 20.20 percent, above the national average of 9.28 percent.

For the twelve months ended June 30, 2017, the bank reported net income of $3.0 million on total equity of $31.0 million. The bank experienced an annualized return on average assets, or ROA, of 1.69 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.