Safe and Sound

Artisans' Bank

Wilmington, DE
2
Star Rating
Founded in 1861, Artisans' Bank is an FDIC-insured bank based in Wilmington, DE. Regulatory filings show the bank having equity of $44.6 million on assets of $523.2 million, as of December 31, 2017.

Thanks to the work of 121 full-time employees in 13 offices in DE, the bank has amassed loans and leases worth $367.1 million, including $339.5 million worth of real estate loans. The bank currently holds $459.1 million in deposits from U.S. customers.

Overall, Bankrate believes that, as of December 31, 2017, Artisans' Bank exhibited a below-average condition, earning 2 out of 5 stars for safety and soundness. Keep reading for a look at how the bank fared on the three key criteria Bankrate used to score American banks.

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THE INSTITUTION'S SCORE

Capital Score

When it comes to measuring an an institution's financial strength, capital is valuable. It works as a bulwark against losses and provides protection for accountholders during times of economic instability for the bank. When it comes to safety and soundness, the higher the capital, the better.

Artisans' Bank finished below the national average of 13.13 on our test to measure the adequacy of a bank's capital, achieving a score of 8 out of a possible 30 points.

A bank's Tier 1 capital ratio is an essential measure of this buffer. Artisans' Bank's Tier 1 capital ratio was 10.39 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 economic downturns.

Overall, Artisans' Bank held equity amounting to 8.53 percent of its assets, which was lower than the national average of 12.03 percent.

Asset Quality Score

This test is intended to try to understand how the bank's loan loss reserves and overall capitalization could be affected by troubled assets, such as past-due loans.

A bank with lots of these kinds of assets could eventually be required to use capital to absorb losses, cutting down on its equity buffer. Many of those assets are also likely to be in non-accrual status and no longer earning money, pushing down earnings and increasing the risk of a future failure.

Artisans' Bank scored 36 out of a possible 40 points on Bankrate's asset quality test, below the national average of 37.49.

A widely used indicator of asset quality is the percentage of problem assets a bank holds compared to its total assets. As of December 31, 2017, 1.67 percent of Artisans' Bank's loans were noncurrent, meaning 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 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 problem loans can be a helpful indicator when evaluating a bank's ability to manage troubled assets. Unfortunately, the FDIC did not provide information on Artisans' Bank's loan loss allowance in its most recent filings.

Earnings score

How profitable a bank is affects its safety and soundness. Earnings may be retained by the bank, boosting its capital buffer, or be used to deal with problematic loans, potentially making the bank more resilient in tough times. Conversely, losses diminish a bank's ability to do those things.

Artisans' Bank did below-average on Bankrate's test of earnings, achieving a score of 0 out of a possible 30.

One important measure of a bank's earnings is return on equity, calculated by dividing net income (profit, essentially) by the total amount of equity. The most recent annualized quarterly return on equity for Artisans' Bank was -3.85 percent, below the national average of 8.10 percent.

The bank recorded net income of $-1.8 million on total equity of $44.6 million for the twelve months ended December 31, 2017. The bank experienced an annualized return on average assets, or ROA, of -0.35 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.