Safe and Sound

Bank of England

England, AR
4
Star Rating
Started in 1898, Bank of England is an FDIC-insured bank based in England, AR. Regulatory filings show the bank having equity of $48.0 million on $333,339,000 in assets, as of June 30, 2017.

With 970 full-time employees in 30 offices in multiple states, the bank has amassed loans and leases worth $281.7 million, including real estate loans of $231.5 million. U.S. bank customers currently have $240.2 million in deposits with the bank.

Overall, Bankrate believes that, as of June 30, 2017, Bank of England 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 important criteria Bankrate used to evaluate American banks.

WHAT IS
SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

Capital acts as a cushion against losses and affords protection for depositors during times of financial instability for the bank. It follows then that when it comes to measuring an a bank's financial resilience, capital is crucial. When looking at safety and soundness, the more capital, the better.
On our test to measure capital adequacy, Bank of England scored 14 out of a possible 30 points, exceeding the national average of 13.38.

A bank's Tier 1 capital ratio is a widely used measure of this buffer. Bank of England's Tier 1 capital ratio was 22.05 percent, higher than the 6 percent level regulators consider adequate, but under the national average of 25.16 percent. A higher capital ratio means the bank will be better able to weather economic headwinds.

Overall, Bank of England held equity amounting to 14.40 percent of its assets, which exceeded the national average of 12.10 percent.

Asset Quality Score

Bankrate uses this test to determine the effect of problem assets, such as past-due loans, on the bank's reserves set aside to cover loan losses, as well as overall capitalization.

A bank with lots of these kinds of assets could eventually be forced to use capital to cover losses, shrinking its cushion of equity. 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, diminishing earnings and elevating the risk of a failure in the future.

On Bankrate's asset quality test, Bank of England scored 32 out of a possible 40 points, lower than the national average of 37.62 points.

A useful indicator of asset quality is the percentage of problem assets a bank holds compared to its total assets. As of June 30, 2017, 1.46 percent of Bank of England'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 keep a reserve known as an "allowance for loan and lease losses" to deal with problem assets . The size of that reserve can be a useful indicator when evaluating a bank's ability to manage problem assets, especially when compared to the total amount of problematic loans. Unfortunately, the FDIC did not provide information on Bank of England's loan loss allowance in its most recent filings.

Earnings score

A bank's profitability has an effect on its safety and soundness. Earnings can be retained by the bank, boosting its capital cushion, or be used to deal with problematic loans, likely making the bank better prepared to withstand financial shocks. Banks that are losing money, however, have less ability to do those things.

Bank of England scored 22 out of a possible 30 on Bankrate's test of earnings, exceeding the national average of 16.52.

Return on equity, calculated by dividing net income (profit, basically) 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 Bank of England was 14.19 percent, above the national average of 9.28 percent.

The bank earned net income of $3.3 million on total equity of $48.0 million for the twelve months ended June 30, 2017. The bank experienced an annualized return on average assets, or ROA, of 2.12 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.