Safe and Sound

South County Bank, National Association

Rancho Santa Mar, CA
4
Star Rating
South County Bank, National Association is a Rancho Santa Mar, CA-based, FDIC-insured bank started in 1999. Regulatory filings show the bank having equity of $16.5 million on assets of $171.9 million, as of June 30, 2017.

U.S. bank customers have $155.0 million on deposit at 5 offices in CA run by 34 full-time employees. With that footprint, the bank currently holds loans and leases worth $112.6 million, $93.5 million of which are for real estate.

Overall, Bankrate believes that, as of June 30, 2017, South County Bank, National Association exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Here's a look at how the bank did on the three major criteria Bankrate used to grade U.S. banks.

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THE INSTITUTION'S SCORE

Capital Score

Capital acts as a bulwark against losses and provides protection for accountholders during times of economic instability for the bank. It follows then that a bank's level of capital is an important measurement of an institution's financial strength. When it comes to safety and soundness, more capital is better.
South County Bank, National Association fell below the national average of 13.38 on our test to measure the adequacy of a bank's capital, scoring 10 out of a possible 30 points.

A bank's Tier 1 capital ratio is a commonly used measure of this buffer. South County Bank, National Association's Tier 1 capital ratio was 13.28 percent, above the 6 percent level regulators consider adequate, but lower than the national average of 25.16 percent. A higher capital ratio suggests the bank will be better able to weather economic challenges.

Overall, South County Bank, National Association held equity amounting to 9.62 percent of its assets, which was lower than the national average of 12.10 percent.

Asset Quality Score

In this test, Bankrate tries to determine the effect of problem assets, such as unpaid loans, on the bank's loan loss reserves and overall capitalization.

A bank with a large number of these kinds of assets could eventually have to use capital to cover losses, reducing its buffer of equity. Many of those assets are also likely to be in non-accrual status and no longer earning interest for the bank, pushing down earnings and increasing the chances of a failure in the future.

South County Bank, National Association scored 40 out of a possible 40 points on Bankrate's test of asset quality, above 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, 0.13 percent of South County Bank, National Association'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 keep a reserve to deal with problem assets known as an "allowance for loan and lease losses." 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. South County Bank, National Association's loan loss allowance was 1,792.47 percent of its total noncurrent loans, above the national average. All things being equal, a higher ratio of loan loss allowance to noncurrent loans is better.

Earnings score

A bank's profitability has an effect on its long-term survivability. A bank can retain its earnings, boosting its capital cushion, or put them to work addressing problematic loans, potentially making the bank more resilient in times of trouble. Obviously, banks that are losing money have less ability to do those things.

South County Bank, National Association scored 18 out of a possible 30 on Bankrate's earnings test, above the national average of 16.52.

Return on equity, calculated by dividing net income (profit, essentially) by the total amount of equity, is one important way to measure a bank's earnings. The most recent annualized quarterly return on equity for South County Bank, National Association was 9.58 percent, above the national average of 9.28 percent.

The bank reported net income of $765,000 on total equity of $16.5 million for the twelve months ended June 30, 2017. The bank reported an annualized return on average assets, or ROA, of 0.92 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.