Safe and Sound

Southcrest Bank, National Association

Atlanta, GA
2
Star Rating
Founded in 1920, Southcrest Bank, National Association is an FDIC-insured bank based in Atlanta, GA. As of December 31, 2017, the bank held equity of $48.5 million on $543.0 million in assets.

With 116 full-time employees in 11 offices in GA, the bank has amassed loans and leases worth $288.0 million, including real estate loans of $258.3 million. U.S. bank customers currently have $445.2 million in deposits with the bank.

Overall, Bankrate believes that, as of December 31, 2017, Southcrest Bank, National Association exhibited a below-average condition, earning 2 out of 5 stars for safety and soundness. Here's a breakdown of how the bank fared on the three major criteria Bankrate used to grade U.S. banks.

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SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

Capital acts as a buffer against losses and provides protection for account holders during periods of economic instability for the bank. It follows then that when it comes to measuring an an institution's financial stability, capital is useful. From a safety and soundness perspective, the more capital, the better.

Southcrest Bank, National Association fell below the national average of 13.13 on our test to measure capital adequacy, scoring 8 out of a possible 30 points.

One widely used measure of this buffer is a bank's Tier 1 capital ratio. Southcrest Bank, National Association's Tier 1 capital ratio was 12.22 percent, above the 6 percent level considered adequate by regulators, but under the national average of 25.65 percent. A higher capital ratio suggests the bank will be better able to stand up to economic headwinds.

Overall, Southcrest Bank, National Association held equity amounting to 8.93 percent of its assets, which was lower than the national average of 12.03 percent.

Asset Quality Score

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

A bank with lots of these types of assets could eventually be forced to use capital to absorb losses, diminishing 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 interest for the bank, resulting in lower earnings and potentially more risk of a future failure.

Southcrest Bank, National Association scored 32 out of a possible 40 points on Bankrate's test of asset quality, less than the national average of 37.49.

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, 1.91 percent of Southcrest Bank, National Association's loans were noncurrent -- in other words, 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 known as an "allowance for loan and lease losses" to deal with troubled assets . How large that reserve is can be a widely used indicator when evaluating a bank's ability to manage troubled assets, especially when compared to the total amount of problematic loans. Unfortunately, the FDIC did not provide information on Southcrest Bank, National Association's loan loss allowance in its most recent filings.

Earnings score

How profitable a bank is affects its safety and soundness. Earnings may be retained by the bank, giving a boost to its capital buffer, or be used to deal with problematic loans, potentially making the bank better able to withstand financial shocks. However, banks that are losing money have less ability to do those things.

Southcrest Bank, National Association did below-average on Bankrate's earnings test, achieving a score of 2 out of a possible 30.

Return on equity, calculated by dividing net income (essentially, profit) by total equity, is one important way to measure a bank's earnings. Southcrest Bank, National Association's most recent annualized quarterly return on equity was 0.56 percent, below the national average of 8.10 percent.

For the twelve months ended December 31, 2017, the bank recorded net income of $317,000 on total equity of $48.5 million. The bank reported an annualized return on average assets, or ROA, of 0.06 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.