Safe and Sound

1880 Bank

Cambridge, MD
5
Star Rating
1880 Bank is an FDIC-insured bank started in 1880 and currently headquartered in Cambridge, MD. Regulatory filings show the bank having equity of $47.5 million on $323,306,000 in assets, as of June 30, 2017.

U.S. bank customers have $270.3 million on deposit at 6 offices in MD run by 49 full-time employees. With that footprint, the bank currently holds loans and leases worth $239.1 million, including real estate loans of $211.6 million.

Overall, Bankrate believes that, as of June 30, 2017, 1880 Bank exhibited a superior condition, earning a full 5 stars for safety and soundness. Here's a breakdown of how the bank did on the three key criteria Bankrate used to score U.S. banks on safety and soundness.

WHAT IS
SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

Capital is an essential measurement of a bank's financial strength. It acts as a buffer against losses and affords protection for accountholders when a bank is struggling financially. When it comes to safety and soundness, the more capital, the better.
1880 Bank exceeded the national average of 13.38 points on our test to measure the adequacy of a bank's capital, scoring 20 out of a possible 30 points.

A bank's Tier 1 capital ratio is a widely used measure of this buffer. 1880 Bank's Tier 1 capital ratio was 17.38 percent, higher than the 6 percent level regulators consider adequate, but less than the national average of 25.16 percent. The higher the capital ratio, the better the bank will be able to weather economic challenges.

Overall, 1880 Bank held equity amounting to 14.70 percent of its assets, which exceeded the national average of 12.10 percent.

Asset Quality Score

This test's purpose is to estimate how the bank's reserves set aside to cover loan losses, as well as overall capitalization could be affected by troubled assets, such as unpaid mortgages.

Having a large number of these types of assets could eventually force a bank to use capital to cover losses, decreasing its equity buffer. It also means that there are likely to be many assets that are in non-accrual status and no longer earning interest for the bank, resulting in lower earnings and potentially more risk of a future failure.

1880 Bank finished below the national average of 37.62 on Bankrate's asset quality test, racking up 32 out of a possible 40 points .

A helpful indicator of asset quality is the percentage of problem assets a bank holds compared to its total assets. As of June 30, 2017, 3.15 percent of 1880 Bank's loans were noncurrent -- in other words, they were more than 90 days past due or were in non-accrual status. That's above the national average of 1.04 percent.

Banks keep a reserve to handle troubled assets known as an "allowance for loan and lease losses." How large that reserve is can be a useful 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 1880 Bank's loan loss allowance in its most recent filings.

Earnings score

A bank's ability to earn money has an effect on its long-term survivability. A bank can retain its earnings, giving a boost to its capital buffer, or put them to work addressing problematic loans, likely making the bank more resilient in tough times. Losses, on the other hand, take away from a bank's ability to do those things.

1880 Bank did above-average on Bankrate's earnings test, achieving a score of 20 out of a possible 30.

One important measure of a bank's earnings is return on equity, or net income (essentially profit) divided by the total amount of equity. The most recent annualized quarterly return on equity for 1880 Bank was 11.00 percent, above the national average of 9.28 percent.

The bank earned net income of $2.5 million on total equity of $47.5 million for the twelve months ended June 30, 2017. The bank had an annualized return on average assets, or ROA, of 1.57 percent, above the 1 percent deemed satisfactory in accordance with industry standards, and above the average for U.S. banks of 1.14 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.