Safe and Sound

Androscoggin Savings Bank

Lewiston, ME
3
Star Rating
Androscoggin Savings Bank is a Lewiston, ME-based, FDIC-insured bank dating back to 1870. The bank holds equity of $104.2 million on assets of $955.2 million, according to December 31, 2017, regulatory filings.

U.S. bank customers have $785.4 million on deposit at 12 offices in ME run by 161 full-time employees. With that footprint, the bank has amassed loans and leases worth $802.7 million, $676.4 million of which are for real estate.

Overall, Bankrate believes that, as of December 31, 2017, Androscoggin Savings Bank exhibited a generally satisfactory condition, earning 3 out of 5 stars for safety and soundness. Here's a breakdown of how the bank did on the three key criteria Bankrate used to evaluate American banks.

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THE INSTITUTION'S SCORE

Capital Score

Capital is a valuable measurement of a bank's financial resilience. It works as a bulwark against losses and as protection for depositors during times of financial instability for the bank. When it comes to safety and soundness, more capital is preferred.

Androscoggin Savings Bank fell below the national average of 13.13 on our test to measure the adequacy of a bank's capital, racking up 12 out of a possible 30 points.

One way to measure this buffer is looking at a bank's Tier 1 capital ratio. Androscoggin Savings Bank's Tier 1 capital ratio was 12.46 percent, above the 6 percent level considered adequate by regulators, but below the national average of 25.65 percent. The higher the capital ratio, the better the bank will be able to weather financial headwinds.

Overall, Androscoggin Savings Bank held equity amounting to 10.92 percent of its assets, which was lower than the national average of 12.03 percent.

Asset Quality Score

Bankrate uses this test to determine the effect of troubled assets, such as past-due loans, on the bank's loan loss reserves and overall capitalization.

A bank with extensive holdings of these kinds of assets could eventually be required to use capital to absorb losses, decreasing its equity cushion. Many of those assets are also likely to be in non-accrual status and thus aren't earning interest for the bank, diminishing earnings and increasing the risk of a failure in the future.

Androscoggin Savings Bank scored 36 out of a possible 40 points on Bankrate's asset quality test, less than the national average of 37.49.

The percentage of problem assets a bank holds compared to its total assets is a handy indicator of asset quality.As of December 31, 2017, 0.92 percent of Androscoggin Savings Bank's loans were noncurrent, meaning they were more than 90 days past due or were in non-accrual status. That's below the national average of 1.01 percent.

Banks maintain a reserve to handle problem assets known as an "allowance for loan and lease losses." Comparing how large that reserve is to the total amount of problematic loans can be a handy indicator when evaluating a bank's ability to manage troubled assets. Unfortunately, the FDIC did not provide information on Androscoggin Savings Bank's loan loss allowance in its most recent filings.

Earnings score

How profitable a bank is affects its safety and soundness. A bank can retain its earnings, expanding its capital buffer, or put them to work addressing problematic loans, likely making the bank more resilient in tough times. Conversely, losses diminish a bank's ability to do those things.

Androscoggin Savings Bank underperformed the average on Bankrate's test of earnings, achieving a score of 6 out of a possible 30.

Return on equity, calculated by dividing net income (profit, essentially) by total equity, is one widely used measure of a bank's earnings. Androscoggin Savings Bank's most recent annualized quarterly return on equity was 2.67 percent, below the national average of 8.10 percent.

The bank reported net income of $2.8 million on total equity of $104.2 million for the twelve months ended December 31, 2017. The bank reported an annualized return on average assets, or ROA, of 0.29 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.