Safe and Sound

Armstrong County Building and Loan Association

Ford City, PA
4
Star Rating
Armstrong County Building and Loan Association is a Ford City, PA-based, FDIC-insured bank dating back to 1925. The bank has equity of $12.5 million on assets of $85.3 million, according to June 30, 2017, regulatory filings.

With 7 full-time employees, the bank has amassed loans and leases worth $54.8 million, including real estate loans of $54.3 million. U.S. bank customers currently have $72.5 million in deposits with the bank.

Overall, Bankrate believes that, as of June 30, 2017, Armstrong County Building and Loan Association exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Keep reading for a look at how the bank did on the three major criteria Bankrate used to score American banks.

WHAT IS
SAFE AND SOUND?

Find out

THE INSTITUTION'S SCORE

Capital Score

Capital is a valuable measurement of an institution's financial strength. It works as a cushion against losses and as protection for depositors when a bank is struggling financially. When looking at safety and soundness, more capital is preferred.
On our test to measure capital adequacy, Armstrong County Building and Loan Association achieved a score of 20 out of a possible 30 points, exceeding the national average of 13.38.

One way to measure this buffer is looking at a bank's Tier 1 capital ratio. Armstrong County Building and Loan Association's Tier 1 capital ratio was 32.34 percent, higher than the 6 percent level considered adequate by regulators, and exceeding the national average of 25.16 percent. The higher the capital ratio, the better the bank will be able to stand up to financial headwinds.

Overall, Armstrong County Building and Loan Association held equity amounting to 14.66 percent of its assets, which exceeded the national average of 12.10 percent.

Asset Quality Score

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

A bank with extensive holdings of these types of assets may eventually have to use capital to cover losses, decreasing its equity cushion. It also means that there are likely to be many assets that are in non-accrual status and thus aren't earning money, decreasing earnings and elevating the risk of a future failure.

On Bankrate's asset quality test, Armstrong County Building and Loan Association scored 36 out of a possible 40 points, less than the national average of 37.62 points.

The percentage of problem assets a bank holds compared to its total assets is a helpful indicator of asset quality.As of June 30, 2017, 2.39 percent of Armstrong County Building and Loan Association's loans were noncurrent, meaning 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 troubled assets . That reserve's size can be a helpful 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 Armstrong County Building and Loan 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. Earnings may be retained by the bank, giving a boost to its capital buffer, or be used to address problematic loans, potentially making the bank more resilient in times of trouble. Losses, on the other hand, diminish a bank's ability to do those things.

Armstrong County Building and Loan Association scored 2 out of a possible 30 on Bankrate's earnings test, failing to reach the national average of 16.52.

Return on equity, calculated by dividing net income (essentially, profit) by total equity, is one important way to measure a bank's earnings. Armstrong County Building and Loan Association's most recent annualized quarterly return on equity was 0.91 percent, below the national average of 9.28 percent.

The bank earned net income of $57,000 on total equity of $12.5 million for the twelve months ended June 30, 2017. The bank had an annualized return on average assets, or ROA, of 0.13 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.