Safe and Sound

Bank Leumi USA

New York, NY
4
Star Rating
Bank Leumi USA is a New York, NY-based, FDIC-insured bank founded in 1968. The bank has equity of $677.7 million on assets of $7.03 billion, according to December 31, 2017, regulatory filings.

Thanks to the work of 454 full-time employees in 6 offices in multiple states, the bank holds loans and leases worth $4.92 billion, including $2.82 billion worth of real estate loans. U.S. bank customers currently have $4.98 billion in deposits with the bank.

Overall, Bankrate believes that, as of December 31, 2017, Bank Leumi USA 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 major criteria Bankrate used to score American banks.

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THE INSTITUTION'S SCORE

Capital Score

Capital is a valuable measurement of a bank's financial strength. It works as a buffer against losses and provides protection for accountholders during times of economic instability for the bank. When it comes to safety and soundness, the more capital, the better.

On our test to measure capital adequacy, Bank Leumi USA received a score of 10 out of a possible 30 points, coming in below the national average of 13.13.

One widely followed measure of this buffer is a bank's Tier 1 capital ratio. Bank Leumi USA's Tier 1 capital ratio was 11.51 percent, above the 6 percent level considered adequate by regulators, but under the national average of 25.65 percent. A higher capital ratio suggests the bank will be better able to stand up to financial challenges.

Overall, Bank Leumi USA held equity amounting to 9.64 percent of its assets, which was lower than the national average of 12.03 percent.

Asset Quality Score

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

A bank with extensive holdings of these kinds 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 thus aren't earning money, resulting in depressed earnings and potentially more risk of a failure in the future.

On Bankrate's test of asset quality, Bank Leumi USA scored 36 out of a possible 40 points, below 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, 1.65 percent of Bank Leumi USA'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 keep a reserve to handle problem assets known as an "allowance for loan and lease losses." How large that reserve is can be a helpful indicator when evaluating a bank's ability to manage problem assets, especially when compared to the total amount of at-risk loans. Unfortunately, the FDIC did not provide information on Bank Leumi USA's loan loss allowance in its most recent filings.

Earnings score

A bank's ability to earn money affects its safety and soundness. Earnings can be retained by the bank, giving a boost to its capital buffer, or be used to address problematic loans, likely making the bank better prepared to withstand economic trouble. Conversely, losses lessen a bank's ability to do those things.

Bank Leumi USA scored 12 out of a possible 30 on Bankrate's earnings test, below the national average of 15.12.

One widely used way to measure a bank's earnings is return on equity, or net income (essentially profit) divided by the total amount of equity. Bank Leumi USA's most recent annualized quarterly return on equity was 5.61 percent, below the national average of 8.10 percent.

For the twelve months ended December 31, 2017, the bank recorded net income of $37.2 million on total equity of $677.7 million. The bank had an annualized return on average assets, or ROA, of 0.53 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.