Safe and Sound

Rancho Santa Fe Thrift & Loan Association

San Marcos, CA
5
Star Rating
Started in 1982, Rancho Santa Fe Thrift & Loan Association is an FDIC-insured bank headquartered in San Marcos, CA. The bank has equity of $27.4 million on $74.3 million in assets, according to December 31, 2017, regulatory filings.

With 3 full-time employees, the bank currently holds loans and leases worth $66.0 million, including real estate loans of $2.2 million. U.S. bank customers currently have $46.2 million in deposits with the bank.

Overall, Bankrate believes that, as of December 31, 2017, Rancho Santa Fe Thrift & Loan Association exhibited a superior condition, earning a full 5 stars for safety and soundness. Keep reading for a breakdown of how the bank fared on the three major criteria Bankrate used to score American banks on safety and soundness.

WHAT IS
SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

Capital is a crucial measurement of an institution's financial fortitude. It works as a bulwark against losses and affords protection for depositors when a bank is struggling financially. When it comes to safety and soundness, the higher the capital, the better.

Rancho Santa Fe Thrift & Loan Association racked up 30 out of a possible 30 points on our test to measure capital adequacy, better than the national average of 13.13.

One commonly used measure of this buffer is a bank's Tier 1 capital ratio. Rancho Santa Fe Thrift & Loan Association's Tier 1 capital ratio was 39.08 percent, exceeding the 6 percent level considered adequate by regulators, and above the national average of 25.65 percent. A higher capital ratio means the bank will be better able to weather economic headwinds.

Overall, Rancho Santa Fe Thrift & Loan Association held equity amounting to 36.88 percent of its assets, which exceeded the national average of 12.03 percent.

Asset Quality Score

This test is intended to estimate how the bank's capitalization and allocated loan loss reserves could be affected by troubled assets, such as unpaid loans.

A bank with large numbers of these types of assets may eventually have to use capital to absorb losses, reducing its equity buffer. It also means that there are likely to be many assets that are in non-accrual status and no longer earning interest for the bank, diminishing earnings and increasing the chances of a failure in the future.

On Bankrate's test of asset quality, Rancho Santa Fe Thrift & Loan Association scored 40 out of a possible 40 points, exceeding the national average of 37.49 points.

The percentage of problem assets a bank holds compared to its total assets is a widely used indicator of asset quality.As of December 31, 2017, 0.11 percent of Rancho Santa Fe Thrift & Loan Association'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 deal with troubled assets known as an "allowance for loan and lease losses." Comparing the size of that reserve to the total amount of problem loans can be a helpful indicator when evaluating a bank's ability to manage problem assets. Unfortunately, the FDIC did not provide information on Rancho Santa Fe Thrift & Loan Association's loan loss allowance in its most recent filings.

Earnings score

A bank's earnings performance has an effect on its long-term survivability. A bank can retain its earnings, expanding its capital buffer, or use them to address problematic loans, potentially making the bank better able to withstand economic shocks. However, banks that are losing money have less ability to do those things.

On Bankrate's test of earnings, Rancho Santa Fe Thrift & Loan Association scored 8 out of a possible 30, below the national average of 15.12.

One important way to measure a bank's earnings is return on equity, calculated by dividing net income (essentially profit) by total equity. Rancho Santa Fe Thrift & Loan Association's most recent annualized quarterly return on equity was 3.70 percent, below the national average of 8.10 percent.

For the twelve months ended December 31, 2017, the bank reported net income of $1.0 million on total equity of $27.4 million. The bank reported an annualized return on average assets, or ROA, of 1.34 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.