Safe and Sound

Colorado Federal Savings Bank

Greenwood Villag, CO
4
Star Rating
Started in 1990, Colorado Federal Savings Bank is an FDIC-insured bank headquartered in Greenwood Villag, CO. The bank has equity of $204.7 million on assets of $1.81 billion, according to December 31, 2017, regulatory filings.

With 55 full-time employees, the bank has amassed loans and leases worth $800.7 million, including real estate loans of $745.4 million. U.S. bank customers currently have $1.10 billion in deposits with the bank.

Overall, Bankrate believes that, as of December 31, 2017, Colorado Federal Savings Bank exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Keep reading for a breakdown of how the bank did on the three important criteria Bankrate used to score American banks.

WHAT IS
SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

Capital works as a buffer against losses and provides protection for depositors when a bank is struggling financially. Therefore, a bank's level of capital is a crucial measurement of an institution's financial resilience. From a safety and soundness perspective, more capital is better.

Colorado Federal Savings Bank fell below the national average of 13.13 on our test to measure capital adequacy, scoring 10 out of a possible 30 points.

A bank's Tier 1 capital ratio is a widely followed measure of this buffer. Colorado Federal Savings Bank's Tier 1 capital ratio was 19.48 percent, exceeding the 6 percent level considered adequate by regulators, but less than the national average of 25.65 percent. A higher capital ratio means the bank will be better able to weather economic headwinds.

Overall, Colorado Federal Savings Bank held equity amounting to 11.30 percent of its assets, which was lower than the national average of 12.03 percent.

Asset Quality Score

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

A bank with large numbers of these types of assets may eventually be forced to use capital to cover losses, shrinking its cushion 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 reduced earnings and potentially more risk of a future failure.

Colorado Federal Savings Bank scored 40 out of a possible 40 points on Bankrate's test of asset quality, beating out the national average of 37.49.

The percentage of problem assets a bank holds compared to its total assets is a handy indicator of asset quality.As of December 31, 2017, 0.60 percent of Colorado Federal Savings Bank's loans were noncurrent, meaning 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 maintain a reserve to handle troubled assets known as an "allowance for loan and lease losses." Comparing the size of that reserve to the total amount of problematic loans can be a widely used indicator when evaluating a bank's ability to manage problem assets. Unfortunately, the FDIC did not provide information on Colorado Federal Savings Bank's loan loss allowance in its most recent filings.

Earnings score

How profitable a bank is affects its safety and soundness. Earnings can be retained by the bank, expanding its capital buffer, or be used to address problematic loans, potentially making the bank more resilient in times of trouble. Obviously, banks that are losing money are less able to do those things.

Colorado Federal Savings Bank beat the national average on Bankrate's earnings test, achieving a score of 18 out of a possible 30.

One important measure of a bank's earnings is return on equity, or net income (profit, essentially) divided by the total amount of equity. The most recent annualized quarterly return on equity for Colorado Federal Savings Bank was 9.05 percent, above the national average of 8.10 percent.

The bank earned net income of $18.0 million on total equity of $204.7 million for the twelve months ended December 31, 2017. The bank had an annualized return on average assets, or ROA, of 1.02 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.