Safe and Sound

Scott Valley Bank

Yreka, CA
4
Star Rating
Founded in 1912, Scott Valley Bank is an FDIC-insured bank headquartered in Yreka, CA. Regulatory filings show the bank having equity of $68.3 million on assets of $671.9 million, as of June 30, 2017.

With 110 full-time employees in 13 offices in multiple states, the bank holds loans and leases worth $427.9 million, including real estate loans of $367.2 million. U.S. bank customers currently have $592.6 million in deposits with the bank.

Overall, Bankrate believes that, as of June 30, 2017, Scott Valley Bank exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Keep reading for an analysis of how the bank faired on the three important criteria Bankrate used to score U.S. banks.

WHAT IS
SAFE AND SOUND?

Find out

THE INSTITUTION'S SCORE

Capital Score

When it comes to measuring an a bank's financial stability, capital is valuable. It works as a bulwark against losses and affords protection for depositors when a bank is experiencing economic instability. When it comes to safety and soundness, the more capital, the better.
Scott Valley Bank received a score of 12 out of a possible 30 points on our test to measure capital adequacy, below the national average of 13.38.

One widely followed measure of this buffer is a bank's Tier 1 capital ratio. Scott Valley Bank's Tier 1 capital ratio was 12.18 percent, higher than the 6 percent level considered adequate by regulators, but below the national average of 25.16 percent. The higher the capital ratio, the better the bank will be able to weather economic difficulties.

Overall, Scott Valley Bank held equity amounting to 10.17 percent of its assets, which was lower than the national average of 12.10 percent.

Asset Quality Score

This test's purpose is 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 past-due loans.

A bank with a large number of these kinds of assets could eventually be forced to use capital to absorb losses, diminishing its buffer of equity. Many of those assets are also likely to be in non-accrual status and thus aren't earning money, pushing down earnings and increasing the risk of a failure in the future.

Scott Valley Bank scored 36 out of a possible 40 points on Bankrate's test of asset quality, below the national average of 37.62.

A widely used indicator of asset quality is the percentage of problem assets a bank holds compared to its total assets. As of June 30, 2017, 0.38 percent of Scott Valley Bank'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 deal with troubled assets known as an "allowance for loan and lease losses." Comparing the the size of that reserve to the total amount of problem loans can be a handy indicator when evaluating a bank's ability to manage troubled assets. Unfortunately, the FDIC did not provide information on Scott Valley Bank'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 cushion, or put them to work addressing problematic loans, likely making the bank better able to withstand economic trouble. Conversely, losses diminish a bank's ability to do those things.

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

One key measure of a bank's earnings is return on equity, calculated by dividing net income (essentially profit) by the total amount of equity. The most recent annualized quarterly return on equity for Scott Valley Bank was 8.97 percent, below the national average of 9.28 percent.

The bank recorded net income of $3.0 million on total equity of $68.3 million for the twelve months ended June 30, 2017. The bank experienced an annualized return on average assets, or ROA, of 0.90 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.