Safe and Sound

Gulf Coast Bank

Abbeville, LA
5
Star Rating
Founded in 1971, Gulf Coast Bank is an FDIC-insured bank headquartered in Abbeville, LA. Regulatory filings show the bank having equity of $45.9 million on assets of $381.9 million, as of June 30, 2017.

With 150 full-time employees in 14 offices in LA, the bank holds loans and leases worth $248.2 million, including real estate loans of $192.9 million. U.S. bank customers currently have $334.3 million in deposits with the bank.

Overall, Bankrate believes that, as of June 30, 2017, Gulf Coast Bank 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 American banks on safety and soundness.

WHAT IS
SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

Capital is a valuable measurement of a bank's financial fortitude. It works as a cushion against losses and affords protection for accountholders when a bank is struggling financially. When it comes to safety and soundness, more capital is preferred.
On our test to measure capital adequacy, Gulf Coast Bank achieved a score of 16 out of a possible 30 points, above the national average of 13.38.

A bank's Tier 1 capital ratio is a widely followed measure of this buffer. Gulf Coast Bank's Tier 1 capital ratio was 18.64 percent, above the 6 percent level regulators consider adequate, but under the national average of 25.16 percent. The higher the capital ratio, the better the bank will be able to weather financial downturns.

Overall, Gulf Coast Bank held equity amounting to 12.01 percent of its assets, which was lower than the national average of 12.10 percent.

Asset Quality Score

In this test, Bankrate tries to estimate the effect of troubled assets, such as past-due loans, on the bank's capitalization and allocated loan loss reserves.

A bank with extensive holdings of these types of assets may eventually have to use capital to absorb losses, reducing its cushion of equity. Many of those assets are also likely to be in non-accrual status and no longer earning interest for the bank, resulting in depressed earnings and potentially more risk of a future failure.

On Bankrate's test of asset quality, Gulf Coast Bank scored 36 out of a possible 40 points, lower than the national average of 37.62 points.

The percentage of problem assets a bank holds compared to its total assets is a useful indicator of asset quality.As of June 30, 2017, 1.90 percent of Gulf Coast 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 to deal with troubled assets known as an "allowance for loan and lease losses." That reserve's size can be a helpful indicator when evaluating a bank's ability to manage problem assets, especially when compared to the total amount of problem loans. Unfortunately, the FDIC did not provide information on Gulf Coast Bank's loan loss allowance in its most recent filings.

Earnings score

A bank's earnings performance affects 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, likely making the bank better able to withstand economic shocks. Conversely, losses diminish a bank's ability to do those things.

Gulf Coast Bank outperformed the average on Bankrate's earnings test, achieving a score of 18 out of a possible 30.

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. Gulf Coast Bank's most recent annualized quarterly return on equity was 8.22 percent, below the national average of 9.28 percent.

For the twelve months ended June 30, 2017, the bank recorded net income of $1.9 million on total equity of $45.9 million. The bank reported an annualized return on average assets, or ROA, of 1.00 percent, right at the level deemed satisfactory in accordance with industry standards, but 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.