Safe and Sound

Home Bank of California

San Diego, CA
5
Star Rating
San Diego, CA-based Home Bank of California is an FDIC-insured bank founded in 1981. The bank has equity of $23.9 million on $157,876,000 in assets, according to June 30, 2017, regulatory filings.

With 19 full-time employees, the bank holds loans and leases worth $145.3 million, including real estate loans of $146.7 million. U.S. bank customers currently have $119.3 million in deposits with the bank.

Overall, Bankrate believes that, as of June 30, 2017, Home Bank of California 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 major criteria Bankrate used to score U.S. banks on safety and soundness.

WHAT IS
SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

Capital is a crucial measurement of an institution's financial fortitude. It acts as a cushion against losses and as protection for accountholders when a bank is experiencing financial instability. When it comes to safety and soundness, the higher the capital, the better.
On our test to measure capital adequacy, Home Bank of California scored 22 out of a possible 30 points, above the national average of 13.38.

One essential measure of this buffer is a bank's Tier 1 capital ratio. Home Bank of California's Tier 1 capital ratio was 21.18 percent, exceeding 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 stand up to financial difficulties.

Overall, Home Bank of California held equity amounting to 15.12 percent of its assets, which exceeded the national average of 12.10 percent.

Asset Quality Score

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

Having large numbers of these kinds of assets suggests a bank may have to use capital to absorb losses, reducing its buffer of equity. Many of those assets are also likely to be in non-accrual status and thus aren't earning interest for the bank, pushing down earnings and elevating the chances of a future failure.

On Bankrate's test of asset quality, Home Bank of California scored 40 out of a possible 40 points, better 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, none of Home Bank of California'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 maintain a reserve to handle troubled assets known as an "allowance for loan and lease losses." The size of that reserve can be a handy indicator when evaluating a bank's ability to manage troubled assets, especially when compared to the total amount of problem loans. Unfortunately, the FDIC did not provide information on Home Bank of California's loan loss allowance in its most recent filings.

Earnings score

A bank's ability to earn money affects its long-term survivability. Earnings can be retained by the bank, increasing its capital buffer, or be used to deal with problematic loans, potentially making the bank better able to withstand financial trouble. However, banks that are losing money are less able to do those things.

Home Bank of California scored 26 out of a possible 30 on Bankrate's test of earnings, beating the national average of 16.52.

Return on equity, calculated by dividing net income (profit, basically) by the total amount of equity, is one widely used measure of a bank's earnings. Home Bank of California's most recent annualized quarterly return on equity was 18.13 percent, above the national average of 9.28 percent.

The bank recorded net income of $2.1 million on total equity of $23.9 million for the twelve months ended June 30, 2017. The bank reported an annualized return on average assets, or ROA, of 2.76 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.