Safe and Sound

HSBC Bank USA, National Association

Mclean, VA
4
Star Rating
Mclean, VA-based HSBC Bank USA, National Association is an FDIC-insured bank founded in 2004. The bank has equity of $24.05 billion on assets of $191.93 billion, according to June 30, 2017, regulatory filings.

U.S. bank customers have $128.15 billion on deposit at 230 offices in multiple states run by 5,708 full-time employees. With that footprint, the bank holds loans and leases worth $66.58 billion, including $28.78 billion worth of real estate loans.

Overall, Bankrate believes that, as of June 30, 2017, HSBC Bank USA, National Association exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Here's a look at how the bank faired on the three major criteria Bankrate used to score American banks.

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THE INSTITUTION'S SCORE

Capital Score

Capital is a crucial measurement of an institution's financial resilience. It works as a buffer against losses and provides protection for accountholders when a bank is experiencing financial trouble. When it comes to safety and soundness, the higher the capital, the better.
HSBC Bank USA, National Association achieved a score of 14 out of a possible 30 points on our test to measure the adequacy of a bank's capital, above the national average of 13.38.

One way to measure this buffer is looking at a bank's Tier 1 capital ratio. HSBC Bank USA, National Association's Tier 1 capital ratio was 17.02 percent, higher than the 6 percent level regulators consider adequate, but below the national average of 25.16 percent. The higher the capital ratio, the better the bank will be able to weather economic downturns.

Overall, HSBC Bank USA, National Association held equity amounting to 12.53 percent of its assets, which exceeded 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 lots of these kinds of assets could eventually be required to use capital to absorb losses, decreasing its equity buffer. Many of those assets are also likely to be in non-accrual status and thus aren't earning money, resulting in reduced earnings and potentially more risk of a failure in the future.

On Bankrate's asset quality test, HSBC Bank USA, National Association scored 40 out of a possible 40 points, exceeding 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, 2.03 percent of HSBC Bank USA, National 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 problem assets . Comparing the that reserve's size to the total amount of at-risk loans can be a handy indicator when evaluating a bank's ability to manage troubled assets. Unfortunately, the FDIC did not provide information on HSBC Bank USA, National Association's loan loss allowance in its most recent filings.

Earnings score

A bank's earnings performance affects its long-term survivability. A bank can retain its earnings, increasing its capital buffer, or put them to work addressing problematic loans, likely making the bank better able to withstand economic trouble. Losses, on the other hand, lessen a bank's ability to do those things.

HSBC Bank USA, National Association scored 8 out of a possible 30 on Bankrate's earnings test, coming in below the national average of 16.52.

Return on equity, calculated by dividing net income (essentially, profit) by the total amount of equity, is one important way to measure a bank's earnings. The most recent annualized quarterly return on equity for HSBC Bank USA, National Association was 3.10 percent, below the national average of 9.28 percent.

The bank reported net income of $368.7 million on total equity of $24.05 billion for the twelve months ended June 30, 2017. The bank experienced an annualized return on average assets, or ROA, of 0.38 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.