Safe and Sound

Adirondack Bank

Utica, NY
3
Star Rating
Founded in 1898, Adirondack Bank is an FDIC-insured bank headquartered in Utica, NY. The bank has equity of $60.6 million on assets of $786.3 million, according to December 31, 2017, regulatory filings.

Thanks to the work of 183 full-time employees in 18 offices in NY, the bank holds loans and leases worth $481.4 million, $373.3 million of which are for real estate. U.S. bank customers currently have $659.3 million in deposits with the bank.

Overall, Bankrate believes that, as of December 31, 2017, Adirondack Bank exhibited a generally satisfactory condition, earning 3 out of 5 stars for safety and soundness. Here's a look at how the bank did on the three major criteria Bankrate used to score U.S. banks.

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THE INSTITUTION'S SCORE

Capital Score

When it comes to measuring an a bank's financial resilience, capital is essential. It works as a cushion against losses and as protection for accountholders when a bank is experiencing economic trouble. From a safety and soundness perspective, more capital is preferred.

Adirondack Bank received a score of 6 out of a possible 30 points on our test to measure the adequacy of a bank's capital, coming in below the national average of 13.13.

One essential measure of this buffer is a bank's Tier 1 capital ratio. Adirondack Bank's Tier 1 capital ratio was 14.54 percent, above the 6 percent level regulators consider adequate, but lower than the national average of 25.65 percent. The higher the capital ratio, the better the bank will be able to stand up to financial difficulties.

Overall, Adirondack Bank held equity amounting to 7.70 percent of its assets, which was lower than the national average of 12.03 percent.

Asset Quality Score

In this test, Bankrate tries to determine the impact of troubled assets, such as unpaid loans, on the bank's loan loss reserves and overall capitalization.

Having lots of these types of assets could eventually force a bank to use capital to absorb losses, diminishing its buffer of equity. Many of those assets are also likely to be in non-accrual status and thus aren't earning money, reducing earnings and elevating the risk of a future failure.

Adirondack Bank scored below the national average of 37.49 on Bankrate's asset quality test, racking up 32 out of a possible 40 points .

A handy indicator of asset quality is the percentage of problem assets a bank holds compared to its total assets. As of December 31, 2017, 2.08 percent of Adirondack 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 1.01 percent.

Banks keep a reserve known as an "allowance for loan and lease losses" to deal with troubled assets . The size of that reserve can be a widely used indicator when evaluating a bank's ability to manage problem assets, especially when compared to the total amount of at-risk loans. Unfortunately, the FDIC did not provide information on Adirondack Bank's loan loss allowance in its most recent filings.

Earnings score

A bank's profitability affects its safety and soundness. A bank can retain its earnings, boosting its capital buffer, or put them to work addressing problematic loans, potentially making the bank better prepared to withstand economic shocks. Losses, on the other hand, take away from a bank's ability to do those things.

Adirondack Bank fell behind the national average on Bankrate's test of earnings, achieving a score of 14 out of a possible 30.

Return on equity, calculated by dividing net income (profit, basically) by the total amount of equity, is one important way to measure a bank's earnings. Adirondack Bank's most recent annualized quarterly return on equity was 7.01 percent, below the national average of 8.10 percent.

For the twelve months ended December 31, 2017, the bank recorded net income of $4.2 million on total equity of $60.6 million. The bank reported an annualized return on average assets, or ROA, of 0.52 percent, below the 1 percent deemed satisfactory in accordance with industry standards and below 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.