Safe and Sound

Armstrong County Building and Loan Association

Ford City, PA
4
Star Rating
Founded in 1925, Armstrong County Building and Loan Association is an FDIC-insured bank headquartered in Ford City, PA. The bank holds equity of $12.5 million on assets of $86.3 million, according to December 31, 2017, regulatory filings.

With 7 full-time employees, the bank has amassed loans and leases worth $55.5 million, including real estate loans of $55.0 million. U.S. bank customers currently have $71.4 million in deposits with the bank.

Overall, Bankrate believes that, as of December 31, 2017, Armstrong County Building and Loan Association exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Here's a look at how the bank fared on the three major criteria Bankrate used to score American banks.

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THE INSTITUTION'S SCORE

Capital Score

Capital is an essential measurement of a bank's financial fortitude. It works as a cushion against losses and as protection for depositors during periods of economic trouble for the bank. From a safety and soundness perspective, the more capital, the better.

Armstrong County Building and Loan Association beat out the national average of 13.13 points on our test to measure capital adequacy, receiving a score of 20 out of a possible 30 points.

One way to measure this buffer is looking at a bank's Tier 1 capital ratio. Armstrong County Building and Loan Association's Tier 1 capital ratio was 33.08 percent, above the 6 percent level considered adequate by regulators, and above the national average of 25.65 percent. A higher capital ratio means the bank will be better able to weather financial difficulties.

Overall, Armstrong County Building and Loan Association held equity amounting to 14.50 percent of its assets, which exceeded the national average of 12.03 percent.

Asset Quality Score

This test's purpose is to estimate how the bank's capitalization and allocated loan loss reserves could be affected by problem assets, such as unpaid mortgages.

A bank with lots of these types of assets could eventually be required to use capital to cover losses, cutting down on its equity buffer. Many of those assets are also likely to be in non-accrual status and thus aren't earning interest for the bank, resulting in reduced earnings and potentially more risk of a failure in the future.

Armstrong County Building and Loan Association scored 36 out of a possible 40 points on Bankrate's asset quality test, falling short of the national average of 37.49.

A widely used indicator of asset quality is the percentage of problem assets a bank holds compared to its total assets. As of December 31, 2017, 1.63 percent of Armstrong County Building and Loan Association's loans were noncurrent -- in other words, they were more than 90 days past due or were in non-accrual status. That's above the national average of 1.01 percent.

Banks maintain a reserve to handle troubled assets known as an "allowance for loan and lease losses." Comparing the reserve's size to the total amount of problematic loans can be a helpful indicator when evaluating a bank's ability to manage troubled assets. Unfortunately, the FDIC did not provide information on Armstrong County Building and Loan Association's loan loss allowance in its most recent filings.

Earnings score

A bank's profitability affects its safety and soundness. A bank can retain its earnings, expanding its capital cushion, or put them to work addressing problematic loans, potentially making the bank better able to withstand economic shocks. Obviously, banks that are losing money have less ability to do those things.

Armstrong County Building and Loan Association scored 4 out of a possible 30 on Bankrate's test of earnings, coming in below the national average of 15.12.

One widely used way to measure a bank's earnings is return on equity, calculated by dividing net income (essentially profit) by total equity. Armstrong County Building and Loan Association's most recent annualized quarterly return on equity was 1.14 percent, below the national average of 8.10 percent.

For the twelve months ended December 31, 2017, the bank earned net income of $142,000 on total equity of $12.5 million. The bank had an annualized return on average assets, or ROA, of 0.17 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.