The most important thing to examine when investing your money is whether the institution is insured by the Federal Deposit Insurance Corporation, or the “FDIC.” Entities or individuals who have deposited $250,000 or less in an FDIC-insured institution can feel comfortable that their deposits are safe.
Entities or individuals looking to invest more than the FDIC insurance level of $250,000 should look to the institution’s Capital-to-Deposit ratio. This ratio measures the amount of capital that the bank has to back the deposits that it holds.
For most banks, bank regulations require that at a minimum, for every dollar of deposits held by a bank, it must have at least $0.05 cents (5%) of its own money in capital accounts. 21st Century Bank has approximately $320 million in deposits and over $41 million in capital – so we have a Capital-to-Deposit ratio of 12.8%, or more than double the minimum requirement.
Strong capital ratios are important because not only do they show the financial strength of the institution, but they should also provide comfort to a depositor as a depositor can be sure that the shareholders of the bank are extremely interested in preserving the high level of its capital accounts as that represents their investment in the bank.
Other factors that reflect the health of an institution are the length of time that current management has been in place, the bank’s growth rate, the quality of the loan portfolio and the annual earnings of the institution. If a bank has good marks in these areas it usually results in a strong Capital-to-Deposit ratio.
21st Century Bank will compare very favorably in all of the areas mentioned as we have strong capital and successful longevity with current management having been in place since 1975. During the tenure of the current management, the total assets of the bank have grown from $3 Million to $380 Million.