Safe and Sound

State Bank of Southern Utah

Cedar City, UT
5
Star Rating
Cedar City, UT-based State Bank of Southern Utah is an FDIC-insured bank founded in 1957. As of December 31, 2017, the bank held equity of $131.9 million on assets of $980.9 million.

With 190 full-time employees in 12 offices in UT, the bank currently holds loans and leases worth $645.3 million, including real estate loans of $535.2 million. U.S. bank customers currently have $831.3 million in deposits with the bank.

Overall, Bankrate believes that, as of December 31, 2017, State Bank of Southern Utah exhibited a superior condition, earning a full 5 stars for safety and soundness. Keep reading for a breakdown of how the bank did on the three key criteria Bankrate used to score U.S. banks on safety and soundness.

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THE INSTITUTION'S SCORE

Capital Score

When it comes to measuring an an institution's financial strength, capital is important. It works as a bulwark against losses and provides protection for depositors during periods of financial instability for the bank. From a safety and soundness perspective, the more capital, the better.

State Bank of Southern Utah exceeded the national average of 13.13 points on our test to measure the adequacy of a bank's capital, receiving a score of 18 out of a possible 30 points.

One essential measure of this buffer is a bank's Tier 1 capital ratio. State Bank of Southern Utah's Tier 1 capital ratio was 18.19 percent, above the 6 percent level considered adequate by regulators, but less than the national average of 25.65 percent. A higher capital ratio means the bank will be better able to weather economic downturns.

Overall, State Bank of Southern Utah held equity amounting to 13.45 percent of its assets, which exceeded the national average of 12.03 percent.

Asset Quality Score

Bankrate uses this test to determine the impact of problem assets, such as past-due mortgages, on the bank's capitalization and allocated loan loss reserves.

A bank with large numbers of these types of assets could eventually have to use capital to absorb losses, diminishing its equity cushion. 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, reducing earnings and elevating the risk of a failure in the future.

State Bank of Southern Utah did better than the national average of 37.49 on Bankrate's asset quality test, racking up 40 out of a possible 40 points .

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, 0.47 percent of State Bank of Southern Utah'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 known as an "allowance for loan and lease losses" to deal with problem assets . Comparing how large that reserve is to the total amount of at-risk loans can be a handy indicator when evaluating a bank's ability to manage troubled assets. Unfortunately, the FDIC did not provide information on State Bank of Southern Utah's loan loss allowance in its most recent filings.

Earnings score

A bank's earnings performance affects its safety and soundness. A bank can retain its earnings, boosting its capital cushion, or use them to address problematic loans, likely making the bank better prepared to withstand economic trouble. Obviously, banks that are losing money are less able to do those things.

State Bank of Southern Utah scored 20 out of a possible 30 on Bankrate's test of earnings, beating the national average of 15.12.

One key measure of a bank's earnings is return on equity, calculated by dividing net income (essentially profit) by total equity. The most recent annualized quarterly return on equity for State Bank of Southern Utah was 10.64 percent, above the national average of 8.10 percent.

For the twelve months ended December 31, 2017, the bank earned net income of $13.5 million on total equity of $131.9 million. The bank reported an annualized return on average assets, or ROA, of 1.40 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.