Safe and Sound

American Express Bank, FSB.

Salt Lake City, UT
5
Star Rating
American Express Bank, FSB. is a Salt Lake City, UT-based, FDIC-insured bank started in 2000. The bank holds equity of $5.97 billion on assets of $49.86 billion, according to June 30, 2017, regulatory filings.

Thanks to the work of 106 full-time employees, the bank holds loans and leases worth $37.54 billion, including real estate loans of $0. The bank currently holds $40.49 billion in deposits from U.S. customers.

Overall, Bankrate believes that, as of June 30, 2017, American Express Bank, FSB. exhibited a superior condition, earning a full 5 stars for safety and soundness. Keep reading for an analysis of how the bank did on the three major criteria Bankrate used to grade American banks on safety and soundness.

WHAT IS
SAFE AND SOUND?

Find out

THE INSTITUTION'S SCORE

Capital Score

Capital acts as a bulwark against losses and as protection for depositors when a bank is struggling financially. It follows then that when it comes to measuring an an institution's financial fortitude, capital is crucial. From a safety and soundness perspective, the more capital, the better.
American Express Bank, FSB. scored 14 out of a possible 30 points on our test to measure capital adequacy, above the national average of 13.38.

A bank's Tier 1 capital ratio is an essential measure of this buffer. American Express Bank, FSB.'s Tier 1 capital ratio was 13.93 percent, higher than the 6 percent level considered adequate by regulators, but less than the national average of 25.16 percent. A higher capital ratio suggests the bank will be better able to weather economic challenges.

Overall, American Express Bank, FSB. held equity amounting to 11.97 percent of its assets, which was lower than the national average of 12.10 percent.

Asset Quality Score

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

A bank with lots of these kinds of assets could eventually have to use capital to absorb losses, decreasing its equity cushion. Many of those assets are also likely to be in non-accrual status and no longer earning interest for the bank, pushing down earnings and elevating the risk of a future failure.

American Express Bank, FSB. scored 40 out of a possible 40 points on Bankrate's test of asset quality, above the national average of 37.62.

The percentage of problem assets a bank holds compared to its total assets is a useful indicator of asset quality.As of June 30, 2017, 0.53 percent of American Express Bank, FSB.'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 1.04 percent.

Banks maintain a reserve known as an "allowance for loan and lease losses" to deal with problem assets . How large that reserve is can be a handy indicator when evaluating a bank's ability to manage problem assets, especially when compared to the total amount of at-risk loans. Unfortunately, the FDIC did not provide information on American Express Bank, FSB.'s loan loss allowance in its most recent filings.

Earnings score

How profitable a bank is affects its long-term survivability. A bank can retain its earnings, giving a boost to its capital cushion, or put them to work addressing 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 earnings test, American Express Bank, FSB. scored 30 out of a possible 30, better than the national average of 16.52.

Return on equity, calculated by dividing net income (profit, basically) by the total amount of equity, is one important way to measure a bank's earnings. The most recent annualized quarterly return on equity for American Express Bank, FSB. was 28.46 percent, above the national average of 9.28 percent.

For the twelve months ended June 30, 2017, the bank reported net income of $882.7 million on total equity of $5.97 billion. The bank had an annualized return on average assets, or ROA, of 3.52 percent, above the 1 percent deemed satisfactory in accordance with industry standards, and above the average for U.S. banks of 1.14 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.