Safe and Sound

New Resource Bank

San Francisco, CA
4
Star Rating
New Resource Bank is a San Francisco, CA-based, FDIC-insured bank started in 2006. As of December 31, 2017, the bank held equity of $40.8 million on $348.6 million in assets.

With 54 full-time employees, the bank has amassed loans and leases worth $258.5 million, including real estate loans of $165.4 million. U.S. bank customers currently have $304.8 million in deposits with the bank.

Overall, Bankrate believes that, as of December 31, 2017, New Resource Bank exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Here's an analysis of how the bank did on the three key criteria Bankrate used to grade U.S. banks.

WHAT IS
SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

Capital works as a buffer against losses and affords protection for depositors when a bank is struggling financially. Therefore, when it comes to measuring an an institution's financial resilience, capital is valuable. When it comes to safety and soundness, more capital is better.

On our test to measure capital adequacy, New Resource Bank achieved a score of 14 out of a possible 30 points, above the national average of 13.13.

One commonly used measure of this buffer is a bank's Tier 1 capital ratio. New Resource Bank's Tier 1 capital ratio was 12.51 percent, higher than the 6 percent level considered adequate by regulators, but lower than the national average of 25.65 percent. A higher capital ratio suggests the bank will be better able to weather economic difficulties.

Overall, New Resource Bank held equity amounting to 11.70 percent of its assets, which was lower than the national average of 12.03 percent.

Asset Quality Score

This test's purpose is to estimate how the bank's loan loss reserves and overall capitalization could be affected by troubled assets, such as past-due mortgages.

Having lots of these kinds of assets suggests a bank could have to use capital to absorb losses, shrinking its equity cushion. It also means that there are likely to be many assets that are in non-accrual status and no longer earning money, pushing down earnings and elevating the chances of a failure in the future.

New Resource Bank beat out the national average of 37.49 on Bankrate's asset quality test, racking up 40 out of a possible 40 points .

The percentage of problem assets a bank holds compared to its total assets is a handy indicator of asset quality.As of December 31, 2017, 0.02 percent of New Resource Bank'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 maintain a reserve to handle problem 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 problem assets, especially when compared to the total amount of at-risk loans. New Resource Bank's loan loss allowance was 10,200.00 percent of its total noncurrent loans, above the national average. All else being equal, a higher ratio of loan loss allowance to noncurrent loans is better.

Earnings score

A bank's profitability 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, potentially making the bank better prepared to withstand financial shocks. Conversely, losses take away from a bank's ability to do those things.

New Resource Bank scored 2 out of a possible 30 on Bankrate's test of earnings, lower than the national average of 15.12.

One key way to measure a bank's earnings is return on equity, or net income (profit, basically) divided by total equity. The most recent annualized quarterly return on equity for New Resource Bank was 0.07 percent, below the national average of 8.10 percent.

The bank recorded net income of $27,000 on total equity of $40.8 million for the twelve months ended December 31, 2017. The bank experienced an annualized return on average assets, or ROA, of 0.01 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.