Asset Quality Score
Bankrate uses this test to determine the impact of problem assets, such as unpaid loans, on the bank's capitalization and allocated loan loss reserves.
A bank with a large number of these kinds of assets may eventually be required 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, reducing earnings and elevating the risk of a future failure.
On Bankrate's test of asset quality, The Bank of Protection scored 40 out of a possible 40 points, above the national average of 37.49 points.
The percentage of problem assets a bank holds compared to its total assets is a helpful indicator of asset quality.As of December 31, 2017, 0.22 percent of The Bank of Protection'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 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 helpful indicator when evaluating a bank's ability to manage troubled assets, especially when compared to the total amount of problematic loans. Unfortunately, the FDIC did not provide information on The Bank of Protection's loan loss allowance in its most recent filings.