What Is Bank Health Score?
BankHealthData's proprietary 0-100 rating that grades every FDIC-insured bank from A (healthiest) to F (weakest) based on four financial factors.
How It Works
The Bank Health Score is BankHealthData's proprietary grading system designed to make complex bank financial data accessible to everyday depositors. Every FDIC-insured bank receives a score from 0 to 100 and a letter grade from A to F, calculated from four publicly available financial metrics drawn from quarterly FDIC call reports.
The four factors and their weights are: Tier 1 capital ratio (35%), which measures the bank's core capital cushion against losses; nonperforming loan ratio (30%, inverted so lower NPL is better), which measures credit quality; liquidity ratio (25%), which measures the bank's ability to meet withdrawal demands; and return on assets (10%), which measures profitability and long-term sustainability.
Grade thresholds are: A (80-100), B (65-79), C (50-64), D (35-49), and F (0-34). These thresholds were calibrated against historical data on bank failures and regulatory actions. Banks that eventually failed typically showed Health Scores in the D and F range for several quarters before closure.
The Health Score is updated quarterly when new FDIC call report data becomes available, typically with a 6-8 week lag from the reporting date. BankHealthData also tracks an 8-quarter trend for each bank, allowing you to see whether a bank's financial health is improving, stable, or deteriorating. The trend is often more informative than the current score alone, a bank scoring 60 and improving tells a very different story than a bank scoring 60 and declining.
The score is designed to be informational, not a substitute for professional financial advice. All deposits at FDIC-insured banks are protected up to $250,000 regardless of the bank's Health Score.
Related Terms
Tier 1 Capital Ratio
The ratio of a bank's core equity capital to its total risk-weighted assets, measuring its ability to absorb losses without failing.
Nonperforming Loans
Loans where the borrower has stopped making payments for 90 or more days, or where the bank no longer expects full repayment.
Liquidity Ratio
The proportion of a bank's assets held in cash and easily convertible securities, measuring its ability to meet withdrawal demands.
Return on Assets
A profitability metric showing how much net income a bank generates for each dollar of assets it holds.
CAMELS Rating System
The confidential supervisory rating system (Capital, Asset quality, Management, Earnings, Liquidity, Sensitivity) used by bank examiners to evaluate a bank's overall condition.