Asset Quality Score
In this test, Bankrate tries to determine the impact of problem assets, such as past-due loans, on the bank's loan loss reserves and overall capitalization.
Having a large number of these kinds of assets suggests a bank may have to use capital to cover losses, diminishing its buffer of equity. Many of those assets are also likely to be in non-accrual status and no longer earning money, diminishing earnings and increasing the chances of a failure in the future.
Unison Bank scored 40 out of a possible 40 points on Bankrate's test of asset quality, beating 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, none of Unison 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 known as an "allowance for loan and lease losses" to deal with problem assets . 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. Unison Bank's loan loss allowance was 397,100.00 percent of its total noncurrent loans, higher than the national average. All things being equal, the higher the ratio of loan loss allowance to noncurrent loans, the better.