Safe and Sound

Goldman Sachs Bank USA

New York, NY
5
Star Rating
Goldman Sachs Bank USA is a New York, NY-based, FDIC-insured bank that opened its doors in 1990. The bank holds equity of $24.87 billion on assets of $151.22 billion, according to June 30, 2017, regulatory filings.

U.S. bank customers have $105.89 billion on deposit at 5 offices in multiple states run by 992 full-time employees. With that footprint, the bank has amassed loans and leases worth $50.68 billion, including real estate loans of $12.64 billion.

Overall, Bankrate believes that, as of June 30, 2017, Goldman Sachs Bank USA exhibited a superior condition, earning a full 5 stars for safety and soundness. Here's a breakdown of how the bank faired on the three important criteria Bankrate used to evaluate American banks on safety and soundness.

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THE INSTITUTION'S SCORE

Capital Score

Capital is an essential measurement of an institution's financial resilience. It works as a cushion against losses and as protection for accountholders during periods of economic instability for the bank. When looking at safety and soundness, the more capital, the better.
On our test to measure capital adequacy, Goldman Sachs Bank USA racked up 24 out of a possible 30 points, above the national average of 13.38.

A bank's Tier 1 capital ratio is a widely used measure of this buffer. Goldman Sachs Bank USA's Tier 1 capital ratio was 11.53 percent, exceeding the 6 percent level considered adequate by regulators, but lower than the national average of 25.16 percent. A higher capital ratio means the bank will be better able to weather economic headwinds.

Overall, Goldman Sachs Bank USA held equity amounting to 16.42 percent of its assets, which exceeded 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.

A bank with a large number of these types of assets could eventually have to use capital to cover losses, shrinking 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 interest for the bank, resulting in diminished earnings and potentially more risk of a future failure.

Goldman Sachs Bank USA did better than the national average of 37.62 on Bankrate's test of asset quality, racking up 40 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, 0.65 percent of Goldman Sachs Bank USA'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 1.04 percent.

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

Earnings score

How profitable a bank is affects its long-term survivability. A bank can retain its earnings, increasing its capital cushion, or use them to deal with problematic loans, potentially making the bank better prepared to withstand financial shocks. Banks that are losing money, however, have less ability to do those things.

On Bankrate's test of earnings, Goldman Sachs Bank USA scored 12 out of a possible 30, falling short of the national average of 16.52.

One widely used measure of a bank's earnings is return on equity, calculated by dividing net income (essentially profit) by the total amount of equity. Goldman Sachs Bank USA's most recent annualized quarterly return on equity was 5.82 percent, below the national average of 9.28 percent.

For the twelve months ended June 30, 2017, the bank reported net income of $721.0 million on total equity of $24.87 billion. The bank had an annualized return on average assets, or ROA, of 0.93 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.