Safe and Sound

Natbank, National Association

Hollywood, FL
4
Star Rating
Natbank, National Association is a Hollywood, FL-based, FDIC-insured bank that opened its doors in 1994. As of December 31, 2017, the bank had equity of $28.4 million on assets of $180.6 million.

U.S. bank customers have $143.7 million on deposit at 3 offices in FL run by 35 full-time employees. With that footprint, the bank holds loans and leases worth $138.5 million, including $131.8 million worth of real estate loans.

Overall, Bankrate believes that, as of December 31, 2017, Natbank, National Association exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Keep reading for a look at how the bank did on the three key criteria Bankrate used to score American banks.

WHAT IS
SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

Capital works as a cushion against losses and affords protection for depositors when a bank is struggling financially. It follows then that when it comes to measuring an an institution's financial fortitude, capital is key. From a safety and soundness perspective, more capital is preferred.

On our test to measure capital adequacy, Natbank, National Association achieved a score of 22 out of a possible 30 points, exceeding the national average of 13.13.

A bank's Tier 1 capital ratio is a widely used measure of this buffer. Natbank, National Association's Tier 1 capital ratio was 30.59 percent, above the 6 percent level considered adequate by regulators, and higher than the national average of 25.65 percent. A higher capital ratio means the bank will be better able to weather economic headwinds.

Overall, Natbank, National Association held equity amounting to 15.75 percent of its assets, which exceeded 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 unpaid loans.

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

Natbank, National Association scored 36 out of a possible 40 points on Bankrate's test of asset quality, less than 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, 1.59 percent of Natbank, National Association'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 keep a reserve known as an "allowance for loan and lease losses" to deal with problem assets . That reserve's size can be a useful indicator when evaluating a bank's ability to manage problem assets, especially when compared to the total amount of at-risk loans. Unfortunately, the FDIC did not provide information on Natbank, National Association's loan loss allowance in its most recent filings.

Earnings score

How profitable a bank is has an effect on its long-term survivability. A bank can retain its earnings, expanding its capital cushion, or put them to work addressing problematic loans, likely making the bank better able to withstand financial shocks. However, banks that are losing money have less ability to do those things.

Natbank, National Association scored 6 out of a possible 30 on Bankrate's test of earnings, less than the national average of 15.12.

Return on equity, calculated by dividing net income (essentially, profit) by total equity, is one key measure of a bank's earnings. Natbank, National Association's most recent annualized quarterly return on equity was 2.89 percent, below the national average of 8.10 percent.

The bank reported net income of $811,000 on total equity of $28.4 million for the twelve months ended December 31, 2017. The bank experienced an annualized return on average assets, or ROA, of 0.45 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.