Safe and Sound

Sunwest Bank

Irvine, CA
5
Star Rating
Sunwest Bank is an FDIC-insured bank started in 1970 and currently based in Irvine, CA. Regulatory filings show the bank having equity of $130.9 million on $1,049,849,000 in assets, as of June 30, 2017.

U.S. bank customers have $812.9 million on deposit at 11 offices in multiple states run by 170 full-time employees. With that footprint, the bank holds loans and leases worth $869.4 million, including real estate loans of $779.1 million.

Overall, Bankrate believes that, as of June 30, 2017, Sunwest Bank exhibited a superior condition, earning a full 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 American banks on safety and soundness.

WHAT IS
SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

When it comes to measuring an a bank's financial stability, capital is valuable. It acts as a bulwark against losses and affords protection for depositors when a bank is experiencing economic instability. From a safety and soundness perspective, the more capital, the better.
On our test to measure capital adequacy, Sunwest Bank achieved a score of 16 out of a possible 30 points, beating out the national average of 13.38.

One way to measure this buffer is looking at a bank's Tier 1 capital ratio. Sunwest Bank's Tier 1 capital ratio was 13.01 percent, higher than the 6 percent level considered adequate by regulators, but less than the national average of 25.16 percent. The higher the capital ratio, the better the bank will be able to weather financial downturns.

Overall, Sunwest Bank held equity amounting to 12.47 percent of its assets, which exceeded the national average of 12.10 percent.

Asset Quality Score

Bankrate uses this test to estimate the effect of problem assets, such as past-due loans, on the bank's loan loss reserves and overall capitalization.

A bank with lots of these kinds of assets may eventually be forced to use capital to cover losses, diminishing its equity cushion. Many of those assets are also likely to be in non-accrual status and thus aren't earning money, resulting in diminished earnings and potentially more risk of a failure in the future.

Sunwest Bank scored 40 out of a possible 40 points on Bankrate's test of asset quality, exceeding the national average of 37.62.

A handy indicator of asset quality is the percentage of problem assets a bank holds compared to its total assets. As of June 30, 2017, 0.39 percent of Sunwest 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 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 problematic loans can be a helpful indicator when evaluating a bank's ability to manage problem assets. Unfortunately, the FDIC did not provide information on Sunwest Bank's loan loss allowance in its most recent filings.

Earnings score

A bank's profitability affects its safety and soundness. Earnings can be retained by the bank, boosting its capital cushion, or be used to deal with problematic loans, potentially making the bank better able to withstand financial shocks. Losses, on the other hand, lessen a bank's ability to do those things.

On Bankrate's test of earnings, Sunwest Bank scored 22 out of a possible 30, better than the national average of 16.52.

Return on equity, calculated by dividing net income (profit, basically) by total equity, is one key measure of a bank's earnings. Sunwest Bank's most recent annualized quarterly return on equity was 12.76 percent, above the national average of 9.28 percent.

For the twelve months ended June 30, 2017, the bank reported net income of $8.1 million on total equity of $130.9 million. The bank experienced an annualized return on average assets, or ROA, of 1.55 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.