Safe and Sound

American Investors Bank and Mortgage

Eden Prairie, MN
4
Star Rating
Founded in 2004, American Investors Bank and Mortgage is an FDIC-insured bank based in Eden Prairie, MN. Regulatory filings show the bank having equity of $8.3 million on $67.3 million in assets, as of December 31, 2017.

Thanks to the efforts of 11 full-time employees, the bank holds loans and leases worth $50.6 million, $47.6 million of which are for real estate. U.S. bank customers currently have $55.0 million in deposits with the bank.

Overall, Bankrate believes that, as of December 31, 2017, American Investors Bank and Mortgage exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Keep reading for an analysis of how the bank fared on the three key criteria Bankrate used to grade U.S. banks.

WHAT IS
SAFE AND SOUND?

Find out

THE INSTITUTION'S SCORE

Capital Score

Capital is an important measurement of a bank's financial fortitude. It acts as a buffer against losses and provides protection for accountholders during times of financial instability for the bank. From a safety and soundness perspective, the more capital, the better.

On our test to measure capital adequacy, American Investors Bank and Mortgage racked up 16 out of a possible 30 points, exceeding the national average of 13.13.

A bank's Tier 1 capital ratio is a widely followed measure of this buffer. American Investors Bank and Mortgage's Tier 1 capital ratio was 17.14 percent, above the 6 percent level considered adequate by regulators, but below the national average of 25.65 percent. A higher capital ratio suggests the bank will be better able to weather economic difficulties.

Overall, American Investors Bank and Mortgage held equity amounting to 12.37 percent of its assets, which exceeded the national average of 12.03 percent.

Asset Quality Score

In this test, Bankrate tries 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 a large number of these kinds of assets could eventually be required 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.

On Bankrate's asset quality test, American Investors Bank and Mortgage scored 40 out of a possible 40 points, above the national average of 37.49 points.

The percentage of problem assets a bank holds compared to its total assets is a widely used indicator of asset quality.As of December 31, 2017, 0.03 percent of American Investors Bank and Mortgage'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 1.01 percent.

Banks keep a reserve to deal with problem assets known as an "allowance for loan and lease losses." Comparing how large that reserve is to the total amount of problematic loans can be a helpful indicator when evaluating a bank's ability to manage problem assets. American Investors Bank and Mortgage's loan loss allowance was 4,600.00 percent of its total noncurrent loans, above the national average. All things being equal, a higher ratio of loan loss allowance to noncurrent loans is better.

Earnings score

A bank's profitability has an effect on its safety and soundness. Earnings can be retained by the bank, increasing its capital buffer, or be used to deal with problematic loans, likely making the bank better able to withstand economic trouble. Losses, on the other hand, take away from a bank's ability to do those things.

American Investors Bank and Mortgage scored 10 out of a possible 30 on Bankrate's earnings test, coming in below the national average of 15.12.

One key measure of a bank's earnings is return on equity, or net income (essentially profit) divided by the total amount of equity. The most recent annualized quarterly return on equity for American Investors Bank and Mortgage was 4.93 percent, below the national average of 8.10 percent.

For the twelve months ended December 31, 2017, the bank earned net income of $401,000 on total equity of $8.3 million. The bank experienced an annualized return on average assets, or ROA, of 0.52 percent, below the 1 percent deemed satisfactory in accordance with industry standards and below the average for U.S. banks of 1.00 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.