Safe and Sound

OneUnited Bank

1
Star Rating
Founded in 1982, OneUnited Bank is an FDIC-insured bank based in Boston, MA. As of December 31, 2017, the bank had equity of $46.0 million on $658.0 million in assets.

Thanks to the efforts of 114 full-time employees in 5 offices in multiple states, the bank currently holds loans and leases worth $490.1 million, including real estate loans of $489.5 million. The bank currently holds $372.8 million in deposits from U.S. customers.

Overall, Bankrate believes that, as of December 31, 2017, OneUnited Bank exhibited a significantly below-average condition, earning 1 out of 5 stars for safety and soundness. Here's a look at how the bank fared on the three key criteria Bankrate used to evaluate American banks.

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THE INSTITUTION'S SCORE

Capital Score

Capital is an essential measurement of an institution's financial fortitude. It acts as a buffer against losses and as protection for depositors when a bank is struggling financially. When looking at safety and soundness, the higher the capital, the better.

On our test to measure the adequacy of a bank's capital, OneUnited Bank received a score of 4 out of a possible 30 points, failing to reach the national average of 13.13.

One important measure of this buffer is a bank's Tier 1 capital ratio. OneUnited Bank's Tier 1 capital ratio was 7.12 percent, higher than the 6 percent level regulators consider adequate, but below the national average of 25.65 percent. The higher the capital ratio, the better the bank will be able to stand up to financial headwinds.

Overall, OneUnited Bank held equity amounting to 6.99 percent of its assets, which was lower than the national average of 12.03 percent.

Asset Quality Score

In this test, Bankrate tries to determine the impact of troubled assets, such as unpaid mortgages, on the bank's capitalization and allocated loan loss reserves.

A bank with lots of these kinds of assets could eventually have to use capital to absorb losses, decreasing its buffer of equity. It also means that there are likely to be many assets that are in non-accrual status and thus aren't earning money, resulting in reduced earnings and potentially more risk of a future failure.

OneUnited Bank scored 36 out of a possible 40 points on Bankrate's test of asset quality, coming in below the national average of 37.49.

A handy indicator of asset quality is the percentage of problem assets a bank holds compared to its total assets. As of December 31, 2017, 1.02 percent of OneUnited Bank'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 keep a reserve to deal with problem assets known as an "allowance for loan and lease losses." Comparing how large that reserve is to the total amount of problem loans can be a handy indicator when evaluating a bank's ability to manage troubled assets. Unfortunately, the FDIC did not provide information on OneUnited Bank's loan loss allowance in its most recent filings.

Earnings score

A bank's profitability has an effect on its safety and soundness. A bank can retain its earnings, increasing its capital cushion, or put them to work addressing problematic loans, likely making the bank more resilient in tough times. Conversely, losses diminish a bank's ability to do those things.

OneUnited Bank scored 0 out of a possible 30 on Bankrate's test of earnings, less than the national average of 15.12.

One key measure of a bank's earnings is return on equity, or net income (profit, basically) divided by the total amount of equity. The most recent annualized quarterly return on equity for OneUnited Bank was -9.62 percent, below the national average of 8.10 percent.

The bank recorded net income of $-4.6 million on total equity of $46.0 million for the twelve months ended December 31, 2017. The bank had an annualized return on average assets, or ROA, of -0.71 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.