Safe and Sound

Goldman Sachs Bank USA

New York, NY
5
Star Rating
Goldman Sachs Bank USA is an FDIC-insured bank founded in 1990 and currently headquartered in New York, NY.164,539,000 The bank holds equity of $25.58 billion on $164.54 billion in assets, according to December 31, 2017, regulatory filings.

Thanks to the work of 1,236 full-time employees in 5 offices in multiple states, the bank has amassed loans and leases worth $59.08 billion, including $13.15 billion worth of real estate loans. The bank currently holds $115.68 billion in deposits from U.S. customers.

Overall, Bankrate believes that, as of December 31, 2017, Goldman Sachs Bank USA exhibited a superior condition, earning a full 5 stars for safety and soundness. Here's a look at how the bank fared on the three major criteria Bankrate used to evaluate American banks on safety and soundness.

WHAT IS
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THE INSTITUTION'S SCORE

Capital Score

Capital is an essential measurement of an institution's financial fortitude. It works as a cushion against losses and as protection for depositors during periods of economic trouble for the bank. When looking at safety and soundness, more capital is better.

Goldman Sachs Bank USA scored above the national average of 13.19 points on our test to measure the adequacy of a bank's capital, receiving a score of 22 out of a possible 30 points.

A bank's Tier 1 capital ratio is an important measure of this buffer. Goldman Sachs Bank USA's Tier 1 capital ratio was 11.03 percent, higher than the 6 percent level considered adequate by regulators, but below the national average of 25.67 percent. A higher capital ratio suggests the bank will be better able to weather financial downturns.

Overall, Goldman Sachs Bank USA held equity amounting to 15.53 percent of its assets, which exceeded the national average of 12.04 percent.

Asset Quality Score

In this test, Bankrate tries to determine the effect of problem assets, such as unpaid loans, on the bank's reserves set aside to cover loan losses, as well as overall capitalization.

A bank with lots of these types of assets may eventually have to use capital to absorb losses, decreasing 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, reducing earnings and elevating the risk of a future failure.

Goldman Sachs Bank USA exceeded the national average of 37.70 on Bankrate's test of asset quality, racking up 40 out of a possible 40 points .

A handy indicator of asset quality is the percentage of problem assets a bank holds compared to its total assets. As of December 31, 2017, 0.49 percent of Goldman Sachs Bank USA'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 1.14 percent.

Banks maintain a reserve to handle problem assets known as an "allowance for loan and lease losses." Comparing the reserve's size to the total amount of problem loans can be a widely used indicator when evaluating a bank's ability to manage problem assets. Unfortunately, the FDIC did not provide information on Goldman Sachs Bank USA's loan loss allowance in its most recent filings.

Earnings score

How profitable a bank is has an effect on its safety and soundness. Earnings can be retained by the bank, boosting its capital cushion, or be used to address problematic loans, potentially making the bank more resilient in tough times. However, banks that are losing money have less ability to do those things.

Goldman Sachs Bank USA scored 12 out of a possible 30 on Bankrate's test of earnings, failing to reach the national average of 16.06.

One important measure of a bank's earnings is return on equity, or net income (profit, essentially) divided by total equity. Goldman Sachs Bank USA's most recent annualized quarterly return on equity was 5.65 percent, below the national average of 8.10 percent.

The bank reported net income of $1.41 billion on total equity of $25.58 billion for the twelve months ended December 31, 2017. The bank reported 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.