Use: Type the minimum and/or maximum rating; (1-300).
Default: None.
Notes: Ranks are the opinion of IDC Financial Publishing, Inc. Ranks range from 1 (the lowest) to 300 (the highest) and fall into one of the following six peer groups:
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Superior |
Banks rated Superior are simply the best by all measures. In addition to favorable capital ratios, most consistently generate ROE above COE. |
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Excellent |
Banks rated Excellent are strong institutions. Their ratios reflect quality management both from a balance sheet and income performance standpoint. Operating expenses and costs of funding are under control, producing a healthy return on equity (ROE). |
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Average |
Banks rated Average meet industry capital standards. When compared to excellent and superior rated banks, most exhibit lower quality loans and narrower profit margins. A specific problem is a low operating profit margin, and/or a large standard deviation in the operating profit margin. The marginal problems of the average bank require shifts in policies and practices to raise asset quality or improve profits. |
|
Below Average |
Banks rated Below Average represent institutions under strain. Average loan delinquency is high. In some banks, liquidity ratios demonstrated risk. In many, excess high risk loans or assets are above the loan loss reserve and threaten equity capital. A specific problem is a low operating profit margin, and/or a large standard deviation in the operating profit margin. Return on financial leverage is negligible, on average, due to narrow (or negative) leverage spreads. Banks are also rated Below Average if they are deemed "Adequately Capitalized" per FDIC capital definitions. |
|
Lowest Ratios |
This Lowest Ratios group contains some banks with less than minimum capital required. In some banks, liquidity ratios demonstrated risk. In many, increasing loan loss provisions expand net losses on the income statement and, along with the excess of net charge-offs, reduce capital ratios. A specific problem is a low operating profit margin, and/or a large standard deviation in the operating profit margin. A high number of failed banks were rated Lowest Ratios prior to failure. Banks are also rated Lowest Ratios if they are deemed "Under Capitalized" or "Significantly Under Capitalized" per FDIC capital definitions. Banks may also be rated Below Average if they are deemed "Adequately Capitalized" and have a high volatility in operating profit margins. |
|
Rank of One |
Banks in the Rank of One group have the highest probability of failure. Loans 90-days past due, non-accrual loans, restructured loans, and other real estate owned, on average, exceed the loan loss reserve and equity capital by a wide margin. Liquidity ratios demonstrated risk. Without major balance sheet improvement, these banks will fail. Banks are also rated Rank of One if they are deemed "Critically Under Capitalized" per FDIC capital definitions. |
Each bank in the Bank Financial Quarterly has a one-line analysis of financial ratios and a one-number summary rank. IDCs' unique CAMEL analysis utilizes financial ratios that have a significant impact on the quality of banks:
Capital risk is determined by Tier I capital as a percent of assets and as a percent of risk-based assets. Tier I & II capital as a percent of risk-based assets (risk-based capital ratio) measures credit and interest rate risk as well as estimates risks in the asset base.
Asset quality is measured by the levels of loan delinquency, non-accrual loans, and high risk assets relative to loan loss reserves and capital ratios. Risk-adjusted assets as part of the risk-based capital ratio further define the quality of assets.
Margins are the best measurement of management's financial controls. Margins represent the spreads between 1) operating profit and net operating revenues, 2) after-tax return on earning assets and cost of funding, and 3) the return on equity compared to estimated cost of equity capital, and 4) NOPAT return on equity compared to the cost of equity capital.
Earning returns measure the success of the bank's strategy. Ratios of revenue yields from investments, loans and non-interest income with comparison to operating costs, loan loss provision, net loan charge-offs, and net non-operating income ratios are the major components of the net operating after-tax return on earning assets (ROEA). Earnings from financial leverage measure the level of leverage and after-tax cost of funding compared to the after-tax return on earning assets (ROEA). Leverage returns measure the efficiency of the bank's financial strategy. Operating assets are financed with the leverage of deposits and borrowings to Tier I capital and its comparative cost. The leverage multiplier illustrates the degree of leverage, while the leverage spread measures its cost relative to operating returns (ROEA).
Liquidity measures 1) balance sheet cash flow as a percent of Tier I capital and 2) illiquid loans compared to stable deposits and borrowings plus available lines of credit at the Federal Home Loan Bank. Leverage returns measure the efficiency of the bank's financial strategy. Operating assets are financed with the leverage of deposits and borrowings to Tier I capital and its comparative cost. The leverage multiplier illustrates the degree of leverage while the leverage spread measures its cost relative to operating returns.
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By Asset Size (Dollars in Millions) |
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|
Range of Rank |
Bank Hold Co's |
Total Banks |
$2,000 or More |
$500 to $2,000 |
$200 to $500 |
$100 to $200 |
$50 to $100 |
$30 to $50 |
$30 or Less |
|
200 - 300 Superior |
321 |
2,939 |
148 |
338 |
636 |
661 |
582 |
302 |
272 |
|
165 - 199 Excellent |
170 |
1,372 |
58 |
153 |
292 |
214 |
298 |
154 |
103 |
|
125 - 164 Average |
205 |
1,483 |
51 |
142 |
285 |
358 |
339 |
178 |
130 |
|
75 - 124 Below Average |
159 |
1,023 |
14 |
82 |
194 |
255 |
259 |
116 |
103 |
|
2 - 74 Lowest Ratios |
71 |
369 |
12 |
53 |
87 |
89 |
76 |
32 |
20 |
|
1 Rank of One |
29 |
71 |
2 |
1 |
23 |
19 |
9 |
11 |
6 |
|
NC Not Calculated |
0 |
0 |
0 |
0 |
0 |
0 |
0 |
0 |
0 |
|
TOTALS: |
955 |
7,257 |
285 |
769 |
1,517 |
1,696 |
1,563 |
793 |
634 |
Description: IDC Financial Publishing, Inc., provides key performance measurement data for government-reporting banks, bank holding companies, savings & loans, savings banks and credit unions across the country. Every quarter, a one-number quality rank is calculated for each institution along with over 35 key financial ratios. The unique method of evaluating financial institutions is based on the acronym CAMEL - Capital adequacy, Asset Quality, Margins, Earning returns, and Leverage / Liquidity. The analysis is strictly based on the financial information reported by each institution to the federal government.