Safe and Sound

Sunstate Bank

Miami, FL
3
Star Rating
Miami, FL-based Sunstate Bank is an FDIC-insured bank started in 1999. As of December 31, 2017, the bank held equity of $24.0 million on assets of $236.6 million.

U.S. bank customers have $191.5 million on deposit at 2 offices in FL run by 36 full-time employees. With that footprint, the bank holds loans and leases worth $145.3 million, $140.9 million of which are for real estate.

Overall, Bankrate believes that, as of December 31, 2017, Sunstate Bank exhibited a generally satisfactory condition, earning 3 out of 5 stars for safety and soundness. Keep reading for an analysis of how the bank fared on the three important criteria Bankrate used to grade American banks.

WHAT IS
SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

Capital works as a bulwark against losses and affords protection for account holders when a bank is struggling financially. It follows then that a bank's level of capital is an important measurement of a bank's financial strength. When it comes to safety and soundness, more capital is preferred.

On our test to measure the adequacy of a bank's capital, Sunstate Bank received a score of 12 out of a possible 30 points, coming in below the national average of 13.13.

A bank's Tier 1 capital ratio is a commonly used measure of this buffer. Sunstate Bank's Tier 1 capital ratio was 12.92 percent, higher than the 6 percent level regulators consider adequate, but below the national average of 25.65 percent. The higher the capital ratio, the better the bank will be able to stand up to economic downturns.

Overall, Sunstate Bank held equity amounting to 10.12 percent of its assets, which was lower than the national average of 12.03 percent.

Asset Quality Score

Bankrate uses this test to estimate the impact of problem assets, such as past-due loans, on the bank's reserves set aside to cover loan losses, as well as overall capitalization.

A bank with lots of these types of assets could eventually be required to use capital to absorb losses, cutting down on 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, resulting in diminished earnings and potentially more risk of a failure in the future.

Sunstate Bank scored above 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 useful indicator of asset quality.As of December 31, 2017, 0.79 percent of Sunstate Bank's loans were noncurrent, meaning 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 keep 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 Sunstate Bank's loan loss allowance in its most recent filings.

Earnings score

A bank's earnings performance affects its safety and soundness. Earnings can be retained by the bank, expanding its capital buffer, or be used to address problematic loans, potentially making the bank better able to withstand economic shocks. Obviously, banks that are losing money have less ability to do those things.

Sunstate Bank underperformed the average on Bankrate's test of earnings, achieving a score of 2 out of a possible 30.

One widely used measure of a bank's earnings is return on equity, calculated by dividing net income (essentially profit) by the total amount of equity. Sunstate Bank's most recent annualized quarterly return on equity was 0.28 percent, below the national average of 8.10 percent.

The bank recorded net income of $67,000 on total equity of $24.0 million for the twelve months ended December 31, 2017. The bank reported an annualized return on average assets, or ROA, of 0.03 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.