Safe and Sound

Banco do Brasil Americas

Miami, FL
4
Star Rating
Miami, FL-based Banco do Brasil Americas is an FDIC-insured bank founded in 1986. As of June 30, 2017, the bank held equity of $57.6 million on assets of $551.9 million.

With 105 full-time employees in 5 offices in FL, the bank holds loans and leases worth $398.1 million, including real estate loans of $387.1 million. U.S. bank customers currently have $482.0 million in deposits with the bank.

Overall, Bankrate believes that, as of June 30, 2017, Banco do Brasil Americas exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Keep reading for a look at how the bank faired on the three major criteria Bankrate used to grade American banks.

WHAT IS
SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

Capital acts as a bulwark against losses and as protection for accountholders when a bank is struggling financially. Therefore, a bank's level of capital is a useful measurement of an institution's financial strength. From a safety and soundness perspective, the more capital, the better.
On our test to measure capital adequacy, Banco do Brasil Americas received a score of 8 out of a possible 30 points, less than the national average of 13.38.

One way to measure this buffer is looking at a bank's Tier 1 capital ratio. Banco do Brasil Americas's Tier 1 capital ratio was 16.44 percent, higher than the 6 percent level regulators consider adequate, but lower than the national average of 25.16 percent. A higher capital ratio means the bank will be better able to weather economic headwinds.

Overall, Banco do Brasil Americas held equity amounting to 10.44 percent of its assets, which was lower than the national average of 12.10 percent.

Asset Quality Score

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

A bank with extensive holdings of these types of assets may eventually be required to use capital to cover losses, shrinking its equity buffer. Many of those assets are also likely to be in non-accrual status and no longer earning interest for the bank, reducing earnings and elevating the chances of a failure in the future.

On Bankrate's test of asset quality, Banco do Brasil Americas scored 40 out of a possible 40 points, beating out the national average of 37.62 points.

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, 0.09 percent of Banco do Brasil Americas'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 . That reserve's size can be a widely used indicator when evaluating a bank's ability to manage troubled assets, especially when compared to the total amount of at-risk loans. Banco do Brasil Americas's loan loss allowance was 1,118.06 percent of its total noncurrent loans, exceeding the national average. All else being equal, a higher ratio of loan loss allowance to noncurrent loans is better.

Earnings score

How profitable a bank is affects its safety and soundness. A bank can retain its earnings, increasing its capital cushion, or put them to work addressing problematic loans, potentially making the bank better able to withstand financial trouble. Losses, on the other hand, diminish a bank's ability to do those things.

On Bankrate's test of earnings, Banco do Brasil Americas scored 16 out of a possible 30, lower than the national average of 16.52.

Return on equity, calculated by dividing net income (profit, essentially) by the total amount of equity, is one important way to measure a bank's earnings. Banco do Brasil Americas's most recent annualized quarterly return on equity was 7.23 percent, below the national average of 9.28 percent.

For the twelve months ended June 30, 2017, the bank reported net income of $2.0 million on total equity of $57.6 million. The bank had an annualized return on average assets, or ROA, of 0.76 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.