Safe and Sound

1st Bank of Sea Isle City

Sea Isle City, NJ
3
Star Rating
1st Bank of Sea Isle City is a Sea Isle City, NJ-based, FDIC-insured bank started in 1882. Regulatory filings show the bank having equity of $24.8 million on $247.2 million in assets, as of December 31, 2017.

Thanks to the work of 41 full-time employees in 3 offices in NJ, the bank currently holds loans and leases worth $163.7 million, including real estate loans of $163.9 million. The bank currently holds $217.1 million in deposits from U.S. customers.

Overall, Bankrate believes that, as of December 31, 2017, 1st Bank of Sea Isle City exhibited a generally satisfactory condition, earning 3 out of 5 stars for safety and soundness. Here's an analysis of how the bank did on the three important criteria Bankrate used to evaluate American banks.

WHAT IS
SAFE AND SOUND?

Find out

THE INSTITUTION'S SCORE

Capital Score

Capital works as a cushion against losses and affords protection for account holders when a bank is experiencing financial instability. Therefore, when it comes to measuring an an institution's financial stability, capital is important. From a safety and soundness perspective, more capital is preferred.

1st Bank of Sea Isle City scored below the national average of 13.19 on our test to measure the adequacy of a bank's capital, achieving a score of 12 out of a possible 30 points.

A bank's Tier 1 capital ratio is a widely used measure of this buffer. 1st Bank of Sea Isle City's Tier 1 capital ratio was 18.22 percent, higher than the 6 percent level considered adequate by regulators, but lower than the national average of 25.67 percent. The higher the capital ratio, the better the bank will be able to weather financial difficulties.

Overall, 1st Bank of Sea Isle City held equity amounting to 10.04 percent of its assets, which was lower than the national average of 12.04 percent.

Asset Quality Score

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

A bank with large numbers of these kinds of assets may eventually be forced to use capital to absorb losses, decreasing its equity buffer. It also means that there are likely to be many assets that are in non-accrual status and no longer earning money, resulting in diminished earnings and potentially more risk of a future failure.

1st Bank of Sea Isle City scored 32 out of a possible 40 points on Bankrate's asset quality test, failing to reach the national average of 37.70.

The percentage of problem assets a bank holds compared to its total assets is a useful indicator of asset quality.As of December 31, 2017, 1.93 percent of 1st Bank of Sea Isle City's loans were noncurrent -- in other words, they were more than 90 days past due or were in non-accrual status. That's above the national average of 1.14 percent.

Banks maintain a reserve known as an "allowance for loan and lease losses" to deal with troubled assets . The size of that reserve can be a helpful 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 1st Bank of Sea Isle City's loan loss allowance in its most recent filings.

Earnings score

How profitable a bank is has an effect on its safety and soundness. A bank can retain its earnings, boosting its capital buffer, or put them to work addressing problematic loans, potentially making the bank more resilient in tough times. Obviously, banks that are losing money have less ability to do those things.

On Bankrate's earnings test, 1st Bank of Sea Isle City scored 2 out of a possible 30, coming in below the national average of 16.06.

One widely used way to measure a bank's earnings is return on equity, or net income (profit, basically) divided by total equity. 1st Bank of Sea Isle City's most recent annualized quarterly return on equity was 0.42 percent, below the national average of 8.10 percent.

For the twelve months ended December 31, 2017, the bank reported net income of $106,000 on total equity of $24.8 million. The bank experienced an annualized return on average assets, or ROA, of 0.04 percent, below the 1 percent deemed satisfactory in accordance with industry standards and below the average for U.S. banks of 1.00 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.