Safe and Sound

EnerBank USA

Salt Lake City, UT
5
Star Rating
EnerBank USA is a Salt Lake City, UT-based, FDIC-insured bank dating back to 2002. As of June 30, 2017, the bank had equity of $177.1 million on assets of $1.37 billion.

Thanks to the work of 273 full-time employees, the bank has amassed loans and leases worth $1.28 billion, including real estate loans of $0. U.S. bank customers currently have $1.17 billion in deposits with the bank.

Overall, Bankrate believes that, as of June 30, 2017, EnerBank USA exhibited a superior condition, earning a full 5 stars for safety and soundness. Here's a breakdown of how the bank faired on the three major criteria Bankrate used to grade U.S. banks on safety and soundness.

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THE INSTITUTION'S SCORE

Capital Score

Capital works as a cushion against losses and provides protection for depositors when a bank is experiencing financial instability. It follows then that when it comes to measuring an an institution's financial stability, capital is essential. When it comes to safety and soundness, the more capital, the better.
On our test to measure capital adequacy, EnerBank USA achieved a score of 16 out of a possible 30 points, better than the national average of 13.38.

A bank's Tier 1 capital ratio is an essential measure of this buffer. EnerBank USA's Tier 1 capital ratio was 13.01 percent, exceeding the 6 percent level considered adequate by regulators, but less than the national average of 25.16 percent. A higher capital ratio means the bank will be better able to stand up to financial difficulties.

Overall, EnerBank USA held equity amounting to 12.92 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 problem assets, such as past-due mortgages, on the bank's loan loss reserves and overall capitalization.

A bank with lots of these kinds of assets could eventually have to use capital to absorb losses, shrinking 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 interest for the bank, reducing earnings and increasing the risk of a future failure.

On Bankrate's asset quality test, EnerBank USA scored 40 out of a possible 40 points, beating the national average of 37.62 points.

A handy indicator of asset quality is the percentage of problem assets a bank holds compared to its total assets. As of June 30, 2017, 0.18 percent of EnerBank USA'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 keep a reserve known as an "allowance for loan and lease losses" to deal with troubled assets . That reserve's size can be a handy indicator when evaluating a bank's ability to manage troubled assets, especially when compared to the total amount of at-risk loans. Unfortunately, the FDIC did not provide information on EnerBank USA'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 use them to deal with problematic loans, likely making the bank better able to withstand financial trouble. However, banks that are losing money have less ability to do those things.

EnerBank USA did above-average on Bankrate's test of earnings, achieving a score of 26 out of a possible 30.

One widely used measure of a bank's earnings is return on equity, or net income (profit, basically) divided by the total amount of equity. The most recent annualized quarterly return on equity for EnerBank USA was 18.15 percent, above the national average of 9.28 percent.

For the twelve months ended June 30, 2017, the bank reported net income of $15.4 million on total equity of $177.1 million. The bank had an annualized return on average assets, or ROA, of 2.25 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.