Safe and Sound

River City Bank

Rome, GA
4
Star Rating
Rome, GA-based River City Bank is an FDIC-insured bank founded in 2006. As of June 30, 2017, the bank held equity of $16.2 million on assets of $153.5 million.

Thanks to the work of 34 full-time employees, the bank holds loans and leases worth $101.2 million, including $86.8 million worth of real estate loans. The bank currently holds $137.0 million in deposits from U.S. customers.

Overall, Bankrate believes that, as of June 30, 2017, River City Bank exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Keep reading for a breakdown of how the bank did on the three key criteria Bankrate used to score U.S. banks.

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SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

Capital acts as a buffer against losses and as protection for accountholders during times of economic trouble for the bank. It follows then that when it comes to measuring an a bank's financial resilience, capital is crucial. From a safety and soundness perspective, more capital is better.
River City Bank received a score of 12 out of a possible 30 points on our test to measure the adequacy of a bank's capital, failing to reach the national average of 13.38.

One widely followed measure of this buffer is a bank's Tier 1 capital ratio. River City Bank's Tier 1 capital ratio was 11.92 percent, above the 6 percent level regulators consider adequate, but less than the national average of 25.16 percent. The higher the capital ratio, the better the bank will be able to stand up to economic downturns.

Overall, River City Bank held equity amounting to 10.58 percent of its assets, which was lower than the national average of 12.10 percent.

Asset Quality Score

This test is intended to try to understand how the bank's reserves set aside to cover loan losses, as well as overall capitalization could be affected by problem assets, such as unpaid loans.

A bank with a large number of these kinds of assets could eventually be required to use capital to cover losses, diminishing its cushion of equity. It also means that there are likely to be many assets that are in non-accrual status and no longer earning interest for the bank, diminishing earnings and increasing the chances of a failure in the future.

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

The percentage of problem assets a bank holds compared to its total assets is a handy indicator of asset quality.As of June 30, 2017, 0.59 percent of River City Bank's loans were noncurrent, meaning 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 known as an "allowance for loan and lease losses" to deal with problem assets . The size of that reserve can be a widely used indicator when evaluating a bank's ability to manage problem assets, especially when compared to the total amount of problematic loans. Unfortunately, the FDIC did not provide information on River City Bank's loan loss allowance in its most recent filings.

Earnings score

How profitable a bank is has an effect on its safety and soundness. Earnings may be retained by the bank, boosting its capital cushion, or be used to deal with problematic loans, likely making the bank more resilient in tough times. Banks that are losing money, however, are less able to do those things.

River City Bank scored 16 out of a possible 30 on Bankrate's earnings test, below the national average of 16.52.

One important way to measure a bank's earnings is return on equity, calculated by dividing net income (profit, basically) by the total amount of equity. River City Bank's most recent annualized quarterly return on equity was 7.27 percent, below the national average of 9.28 percent.

The bank recorded net income of $573,000 on total equity of $16.2 million for the twelve months ended June 30, 2017. The bank experienced an annualized return on average assets, or ROA, of 0.74 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.