Safe and Sound

1st Bank of Sea Isle City

Sea Isle City, NJ
3
Star Rating
Founded in 1882, 1st Bank of Sea Isle City is an FDIC-insured bank based in Sea Isle City, NJ. The bank has equity of $24.8 million on $247.2 million in assets, according to December 31, 2017, regulatory filings.

With 41 full-time employees in 3 offices in NJ, the bank has amassed loans and leases worth $163.7 million, including real estate loans of $163.9 million. U.S. bank customers currently have $217.1 million in deposits with the bank.

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 fared on the three important criteria Bankrate used to evaluate U.S. banks.

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THE INSTITUTION'S SCORE

Capital Score

Capital works as a buffer against losses and provides protection for depositors during periods of financial instability for the bank. It follows then that a bank's level of capital is a key measurement of a bank's financial resilience. When it comes to safety and soundness, the more capital, the better.

1st Bank of Sea Isle City came in below the national average of 13.13 on our test to measure the adequacy of a bank's capital, receiving a score of 12 out of a possible 30 points.

A bank's Tier 1 capital ratio is a widely followed measure of this buffer. 1st Bank of Sea Isle City's Tier 1 capital ratio was 18.22 percent, above the 6 percent level considered adequate by regulators, but less than the national average of 25.65 percent. A higher capital ratio means the bank will be better able to stand up to economic challenges.

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 12.03 percent.

Asset Quality Score

This test is intended to try to understand how the bank's capitalization and allocated loan loss reserves could be affected by troubled assets, such as past-due loans.

Having extensive holdings of these kinds of assets means a bank may eventually have to use capital to absorb losses, reducing its equity buffer. Many of those assets are also likely to be in non-accrual status and thus aren't earning interest for the bank, resulting in lower earnings and potentially more risk of a failure in the future.

1st Bank of Sea Isle City scored 32 out of a possible 40 points on Bankrate's test of asset quality, falling short of the national average of 37.49.

The percentage of problem assets a bank holds compared to its total assets is a helpful 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 1.01 percent.

Banks keep a reserve to deal with troubled assets known as an "allowance for loan and lease losses." Comparing the size of that reserve to the total amount of problematic loans can be a useful indicator when evaluating a bank's ability to manage troubled assets. 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

A bank's profitability affects its safety and soundness. A bank can retain its earnings, giving a boost to its capital cushion, or put them to work addressing problematic loans, potentially making the bank better prepared to withstand economic trouble. Banks that are losing money, however, have less ability to do those things.

1st Bank of Sea Isle City fell short of the national average on Bankrate's test of earnings, achieving a score of 2 out of a possible 30.

Return on equity, calculated by dividing net income (profit, basically) by total equity, is one important way to measure a bank's earnings. 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.

The bank earned net income of $106,000 on total equity of $24.8 million for the twelve months ended December 31, 2017. The bank reported 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.