Safe and Sound

Asian Bank

Philadelphia, PA
4
Star Rating
Asian Bank is a Philadelphia, PA-based, FDIC-insured bank founded in 1999. The bank holds equity of $15.0 million on assets of $171.3 million, according to June 30, 2017, regulatory filings.

Thanks to the work of 30 full-time employees, the bank holds loans and leases worth $134.0 million, including $132.8 million worth of real estate loans. U.S. bank customers currently have $131.5 million in deposits with the bank.

Overall, Bankrate believes that, as of June 30, 2017, Asian Bank exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Here's a breakdown of how the bank faired on the three important criteria Bankrate used to grade U.S. banks.

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THE INSTITUTION'S SCORE

Capital Score

Capital is a valuable measurement of an institution's financial resilience. It works as a bulwark against losses and provides protection for depositors when a bank is experiencing financial trouble. From a safety and soundness perspective, the more capital, the better.
Asian Bank received a score of 8 out of a possible 30 points on our test to measure capital adequacy, less than the national average of 13.38.

One widely used measure of this buffer is a bank's Tier 1 capital ratio. Asian Bank's Tier 1 capital ratio was 11.59 percent, exceeding the 6 percent level regulators consider adequate, but under the national average of 25.16 percent. The higher the capital ratio, the better the bank will be able to weather financial downturns.

Overall, Asian Bank held equity amounting to 8.74 percent of its assets, which was lower than the national average of 12.10 percent.

Asset Quality Score

This test is intended to try to understand how the bank's reserves set aside to cover loan losses, as well as overall capitalization could be affected by problem assets, such as unpaid loans.

Having large numbers of these types of assets suggests a bank could have to use capital to absorb losses, diminishing its buffer of equity. Many of those assets are also likely to be in non-accrual status and no longer earning interest for the bank, resulting in depressed earnings and potentially more risk of a failure in the future.

Asian Bank fell below the national average of 37.62 on Bankrate's asset quality test, racking up 36 out of a possible 40 points .

A useful indicator of asset quality is the percentage of problem assets a bank holds compared to its total assets. As of June 30, 2017, 1.14 percent of Asian Bank'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 keep a reserve to handle problem assets known as an "allowance for loan and lease losses." That reserve's size can be a widely used indicator when evaluating a bank's ability to manage problem assets, especially when compared to the total amount of problem loans. Unfortunately, the FDIC did not provide information on Asian Bank's loan loss allowance in its most recent filings.

Earnings score

A bank's ability to earn money affects 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. However, banks that are losing money are less able to do those things.

On Bankrate's earnings test, Asian Bank scored 18 out of a possible 30, better than the national average of 16.52.

One important measure of a bank's earnings is return on equity, calculated by dividing net income (profit, essentially) by total equity. Asian Bank's most recent annualized quarterly return on equity was 9.70 percent, above the national average of 9.28 percent.

For the twelve months ended June 30, 2017, the bank reported net income of $708,000 on total equity of $15.0 million. The bank experienced an annualized return on average assets, or ROA, of 0.83 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.