Safe and Sound

Gateway Bank, F.S.B.

Oakland, CA
1
Star Rating
Oakland, CA-based Gateway Bank, F.S.B. is an FDIC-insured bank started in 1990. Regulatory filings show the bank having equity of $7.1 million on $119.8 million in assets, as of December 31, 2017.

With 17 full-time employees, the bank has amassed loans and leases worth $75.8 million, including real estate loans of $77.5 million. U.S. bank customers currently have $110.8 million in deposits with the bank.

Overall, Bankrate believes that, as of December 31, 2017, Gateway Bank, F.S.B. exhibited a significantly below-average condition, earning 1 out of 5 stars for safety and soundness. Here's a look at how the bank fared on the three major criteria Bankrate used to score American banks.

WHAT IS
SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

Capital acts as a cushion against losses and provides protection for depositors when a bank is experiencing economic instability. It follows then that a bank's level of capital is a useful measurement of a bank's financial strength. When looking at safety and soundness, the more capital, the better.

Gateway Bank, F.S.B. received a score of 2 out of a possible 30 points on our test to measure the adequacy of a bank's capital, less than the national average of 13.13.

One way to measure this buffer is looking at a bank's Tier 1 capital ratio. Gateway Bank, F.S.B.'s Tier 1 capital ratio was 5.47 percent, lower than the 6 percent level considered adequate by regulators, and less than the national average of 25.65 percent. The higher the capital ratio, the better the bank will be able to stand up to economic headwinds.

Overall, Gateway Bank, F.S.B. held equity amounting to 5.95 percent of its assets, which was lower than the national average of 12.03 percent.

Asset Quality Score

In this test, Bankrate tries to estimate the effect of problem assets, such as past-due mortgages, on the bank's capitalization and allocated loan loss reserves.

A bank with lots of these types of assets may eventually be required to use capital to cover losses, shrinking its equity buffer. It also means that there are likely to be many assets that are in non-accrual status and thus aren't earning money, reducing earnings and elevating the risk of a failure in the future.

Gateway Bank, F.S.B. scored 20 out of a possible 40 points on Bankrate's test of asset quality, coming in below the national average of 37.49.

A useful indicator of asset quality is the percentage of problem assets a bank holds compared to its total assets. As of December 31, 2017, 3.02 percent of Gateway Bank, F.S.B.'s loans were noncurrent, meaning 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 maintain a reserve to handle troubled assets known as an "allowance for loan and lease losses." The size of that reserve can be a handy indicator when evaluating a bank's ability to manage troubled assets, especially when compared to the total amount of at-risk loans. Unfortunately, the FDIC did not provide information on Gateway Bank, F.S.B.'s loan loss allowance in its most recent filings.

Earnings score

How profitable a bank is affects its long-term survivability. Earnings can be retained by the bank, giving a boost to its capital buffer, or be used to address problematic loans, likely making the bank more resilient in times of trouble. Conversely, losses take away from a bank's ability to do those things.

Gateway Bank, F.S.B. did below-average on Bankrate's test of earnings, achieving a score of 0 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. The most recent annualized quarterly return on equity for Gateway Bank, F.S.B. was -14.66 percent, below the national average of 8.10 percent.

For the twelve months ended December 31, 2017, the bank recorded net income of $-1.2 million on total equity of $7.1 million. The bank had an annualized return on average assets, or ROA, of -0.90 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.