How the Scorecard Works

The Bank Director Bank Performance Scorecard is determined by using six performance criteria that measure profitability, balance sheet strength, and asset quality. The criteria are:
Return on average assets, which measures a bank’s profitability relative to its total assets. This metric was given a full weighting in the Scorecard calculation.
Return on average equity, a second measurement of profitability that focuses on shareholder returns. This metric also received a full weighting in the Scorecard calculation.
Tier-1 capital ratio, which is comprised of shareholders’ equity, retained earnings, and convertible preferred stock divided by total assets. This received a half weighting.
Leverage ratio, which is shareholders’ equity divided by total assets. This received a half weighting.
Nonperforming asset ratio, which is the ratio of nonaccrual loans and foreclosed assets to total loans and Other Real Estate Owned. This received a half weighting.
Reserve coverage, which is loan loss reserves divided by total loans. This received a half weighting.
The institutions received a numerical rating in each individual category, with the highest ranked bank getting a score of one and the lowest ranked bank a score of 150. Each bank’s and thrift’s scores were then added across and the bank with the lowest score won. In the four categories that received a half weighting, the institutions’ actual scores were divided by two before they were added up. For example, a bank that finished 20th in the leverage ratio category only received 10 points for scoring purposes.