Safe and Sound

Colonial Savings, F.A.

Fort Worth, TX
2
Star Rating
Colonial Savings, F.A. is an FDIC-insured bank started in 1962 and currently based in Fort Worth, TX. The bank has equity of $244.2 million on assets of $969.5 million, according to December 31, 2017, regulatory filings.

Thanks to the work of 709 full-time employees in 9 offices in TX, the bank holds loans and leases worth $495.6 million, including $493.7 million worth of real estate loans. The bank currently holds $644.8 million in deposits from U.S. customers.

Overall, Bankrate believes that, as of December 31, 2017, Colonial Savings, F.A. exhibited a below-average condition, earning 2 out of 5 stars for safety and soundness. Keep reading for an analysis of how the bank did on the three major 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 bulwark against losses and as protection for depositors when a bank is struggling financially. Therefore, when it comes to measuring an a bank's financial fortitude, capital is useful. From a safety and soundness perspective, the higher the capital, the better.

On our test to measure the adequacy of a bank's capital, Colonial Savings, F.A. received a score of 2 out of a possible 30 points, below the national average of 13.13.

One way to measure this buffer is looking at a bank's Tier 1 capital ratio. Colonial Savings, F.A.'s Tier 1 capital ratio was 26.31 percent, exceeding the 6 percent level regulators consider adequate, and exceeding the national average of 25.65 percent. A higher capital ratio means the bank will be better able to stand up to economic difficulties.

Overall, Colonial Savings, F.A. held equity amounting to 25.19 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 troubled assets, such as unpaid mortgages.

A bank with lots of these kinds of assets may eventually be forced to use capital to absorb losses, cutting down on its equity buffer. Many of those assets are also likely to be in non-accrual status and no longer earning interest for the bank, resulting in reduced earnings and potentially more risk of a failure in the future.

Colonial Savings, F.A. finished below the national average of 37.49 on Bankrate's asset quality test, racking up 32 out of a possible 40 points .

A useful indicator of asset quality is the percentage of problem assets a bank holds compared to its total assets. As of December 31, 2017, 19.07 percent of Colonial Savings, F.A.'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 1.01 percent.

Banks maintain a reserve to deal with troubled assets known as an "allowance for loan and lease losses." How large that reserve is can be a useful indicator when evaluating a bank's ability to manage troubled assets, especially when compared to the total amount of problem loans. Unfortunately, the FDIC did not provide information on Colonial Savings, F.A.'s loan loss allowance in its most recent filings.

Earnings score

How profitable a bank is affects its safety and soundness. Earnings may be retained by the bank, increasing its capital cushion, or be used to address problematic loans, potentially making the bank better prepared to withstand economic trouble. Obviously, banks that are losing money are less able to do those things.

Colonial Savings, F.A. scored 0 out of a possible 30 on Bankrate's test of earnings, below the national average of 15.12.

One important measure of a bank's earnings is return on equity, or net income (essentially profit) divided by the total amount of equity. Colonial Savings, F.A.'s most recent annualized quarterly return on equity was 5.23 percent, below the national average of 8.10 percent.

The bank earned net income of $12.7 million on total equity of $244.2 million for the twelve months ended December 31, 2017. The bank reported an annualized return on average assets, or ROA, of 1.15 percent, above the 1 percent deemed satisfactory in accordance with industry standards, and above 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.