Safe and Sound

USAA Savings Bank

Las Vegas, NV
5
Star Rating
USAA Savings Bank is a Las Vegas, NV-based, FDIC-insured bank dating back to 1996. As of December 31, 2017, the bank had equity of $263.9 million on $1.89 billion in assets.

Thanks to the efforts of 8 full-time employees, the bank has amassed loans and leases worth $0, $0 of which are for real estate. The bank currently holds $432.1 million in deposits from U.S. customers.

Overall, Bankrate believes that, as of December 31, 2017, USAA Savings Bank exhibited a superior condition, earning a full 5 stars for safety and soundness. Here's an analysis of how the bank fared on the three key criteria Bankrate used to score American banks on safety and soundness.

WHAT IS
SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

Capital works as a cushion against losses and as protection for depositors when a bank is experiencing economic trouble. It follows then that a bank's level of capital is an important measurement of an institution's financial strength. When it comes to safety and soundness, the higher the capital, the better.

USAA Savings Bank exceeded the national average of 13.13 points on our test to measure capital adequacy, racking up 18 out of a possible 30 points.

One widely followed measure of this buffer is a bank's Tier 1 capital ratio. USAA Savings Bank's Tier 1 capital ratio was 62.83 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 financial challenges.

Overall, USAA Savings Bank held equity amounting to 13.96 percent of its assets, which exceeded the national average of 12.03 percent.

Asset Quality Score

Bankrate uses this test to determine the impact of problem assets, such as unpaid mortgages, on the bank's reserves set aside to cover loan losses, as well as overall capitalization.

A bank with extensive holdings of these types of assets may eventually be forced to use capital to absorb losses, reducing its equity buffer. 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, resulting in diminished earnings and potentially more risk of a future failure.

USAA Savings Bank scored 40 out of a possible 40 points on Bankrate's asset quality test, better than the national average of 37.49.

The percentage of problem assets a bank holds compared to its total assets is a useful indicator of asset quality.

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

Earnings score

How profitable a bank is 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 better prepared to withstand financial shocks. However, banks that are losing money have less ability to do those things.

On Bankrate's earnings test, USAA Savings Bank scored 30 out of a possible 30, exceeding the national average of 15.12.

Return on equity, calculated by dividing net income (essentially, profit) by the total amount of equity, is one important way to measure a bank's earnings. USAA Savings Bank's most recent annualized quarterly return on equity was 80.93 percent, above the national average of 8.10 percent.

For the twelve months ended December 31, 2017, the bank recorded net income of $206.4 million on total equity of $263.9 million. The bank had an annualized return on average assets, or ROA, of 11.45 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.