Safe and Sound

First National Bank of Southern California

Riverside, CA
5
Star Rating
Riverside, CA-based First National Bank of Southern California is an FDIC-insured bank started in 1984. The bank has equity of $40.3 million on assets of $274.7 million, according to December 31, 2017, regulatory filings.

With 33 full-time employees in 4 offices in CA, the bank holds loans and leases worth $214.8 million, including real estate loans of $194.2 million. U.S. bank customers currently have $234.0 million in deposits with the bank.

Overall, Bankrate believes that, as of December 31, 2017, First National Bank of Southern California exhibited a superior condition, earning a full 5 stars for safety and soundness. Here's a breakdown of how the bank did on the three important criteria Bankrate used to score U.S. banks on safety and soundness.

WHAT IS
SAFE AND SOUND?

Find out

THE INSTITUTION'S SCORE

Capital Score

Capital acts as a cushion against losses and provides protection for account holders when a bank is struggling financially. It follows then that when it comes to measuring an a bank's financial fortitude, capital is valuable. When it comes to safety and soundness, more capital is preferred.

On our test to measure capital adequacy, First National Bank of Southern California scored 20 out of a possible 30 points, better than the national average of 13.13.

A bank's Tier 1 capital ratio is a widely used measure of this buffer. First National Bank of Southern California's Tier 1 capital ratio was 17.10 percent, above the 6 percent level considered adequate by regulators, but lower than the national average of 25.65 percent. The higher the capital ratio, the better the bank will be able to weather financial headwinds.

Overall, First National Bank of Southern California held equity amounting to 14.67 percent of its assets, which exceeded the national average of 12.03 percent.

Asset Quality Score

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

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

On Bankrate's test of asset quality, First National Bank of Southern California scored 40 out of a possible 40 points, exceeding the national average of 37.49 points.

A widely used indicator of asset quality is the percentage of problem assets a bank holds compared to its total assets. As of December 31, 2017, none of First National Bank of Southern California'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 1.01 percent.

Banks keep a reserve to deal with problem assets known as an "allowance for loan and lease losses." Comparing the reserve's size to the total amount of at-risk loans can be a useful indicator when evaluating a bank's ability to manage problem assets. Unfortunately, the FDIC did not provide information on First National Bank of Southern California's loan loss allowance in its most recent filings.

Earnings score

A bank's ability to earn money affects its safety and soundness. Earnings may be retained by the bank, boosting its capital buffer, or be used to deal with problematic loans, likely making the bank better prepared to withstand economic shocks. Obviously, banks that are losing money have less ability to do those things.

First National Bank of Southern California scored 20 out of a possible 30 on Bankrate's earnings test, exceeding the national average of 15.12.

One widely used way to measure a bank's earnings is return on equity, or net income (profit, basically) divided by total equity. First National Bank of Southern California's most recent annualized quarterly return on equity was 12.66 percent, above the national average of 8.10 percent.

For the twelve months ended December 31, 2017, the bank recorded net income of $4.8 million on total equity of $40.3 million. The bank experienced an annualized return on average assets, or ROA, of 1.90 percent, above the 1 percent deemed satisfactory in accordance with industry standards, and above 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.