Safe and Sound

Armed Forces Bank, National Association

Fort Leavenworth, KS
5
Star Rating
Fort Leavenworth, KS-based Armed Forces Bank, National Association is an FDIC-insured bank started in 1907. The bank holds equity of $207.3 million on $1,070,088,000 in assets, according to June 30, 2017, regulatory filings.

With 426 full-time employees in 46 offices in multiple states, the bank currently holds loans and leases worth $606.1 million, including real estate loans of $418.2 million. U.S. bank customers currently have $852.7 million in deposits with the bank.

Overall, Bankrate believes that, as of June 30, 2017, Armed Forces Bank, National Association exhibited a superior condition, earning a full 5 stars for safety and soundness. Keep reading for an analysis of how the bank faired on the three key criteria Bankrate used to evaluate American banks on safety and soundness.

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THE INSTITUTION'S SCORE

Capital Score

Capital works as a cushion against losses and affords protection for depositors during periods of financial instability for the bank. It follows then that when it comes to measuring an a bank's financial fortitude, capital is essential. When looking at safety and soundness, more capital is better.
Armed Forces Bank, National Association did better than the national average of 13.38 points on our test to measure the adequacy of a bank's capital, scoring 28 out of a possible 30 points.

One important measure of this buffer is a bank's Tier 1 capital ratio. Armed Forces Bank, National Association's Tier 1 capital ratio was 25.24 percent, higher than the 6 percent level regulators consider adequate, and exceeding the national average of 25.16 percent. The higher the capital ratio, the better the bank will be able to weather financial difficulties.

Overall, Armed Forces Bank, National Association held equity amounting to 19.37 percent of its assets, which exceeded the national average of 12.10 percent.

Asset Quality Score

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

A bank with extensive holdings of these types of assets may eventually be forced to use capital to cover losses, diminishing its equity cushion. Many of those assets are also likely to be in non-accrual status and thus aren't earning interest for the bank, decreasing earnings and increasing the risk of a failure in the future.

Armed Forces Bank, National Association fell short of the national average of 37.62 on Bankrate's asset quality test, racking up 32 out of a possible 40 points .

The percentage of problem assets a bank holds compared to its total assets is a widely used indicator of asset quality.As of June 30, 2017, 3.38 percent of Armed Forces 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 1.04 percent.

Banks maintain a reserve known as an "allowance for loan and lease losses" to deal with problem assets . Comparing the that reserve's size to the total amount of problem loans can be a helpful indicator when evaluating a bank's ability to manage problem assets. Unfortunately, the FDIC did not provide information on Armed Forces Bank, National Association's loan loss allowance in its most recent filings.

Earnings score

How profitable a bank is has an effect on its long-term survivability. A bank can retain its earnings, boosting its capital cushion, or put them to work addressing problematic loans, potentially making the bank more resilient in times of trouble. Banks that are losing money, however, are less able to do those things.

Armed Forces Bank, National Association did below-average on Bankrate's test of earnings, achieving a score of 10 out of a possible 30.

Return on equity, calculated by dividing net income (profit, essentially) by the total amount of equity, is one important measure of a bank's earnings. The most recent annualized quarterly return on equity for Armed Forces Bank, National Association was 3.98 percent, below the national average of 9.28 percent.

For the twelve months ended June 30, 2017, the bank recorded net income of $4.2 million on total equity of $207.3 million. The bank reported an annualized return on average assets, or ROA, of 0.78 percent, below the 1 percent deemed satisfactory in accordance with industry standards and below 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.