Safe and Sound

BlackRidgeBANK

Fargo, ND
3
Star Rating
BlackRidgeBANK is a Fargo, ND-based, FDIC-insured bank founded in 2007. Regulatory filings show the bank having equity of $51.8 million on assets of $446.9 million, as of December 31, 2017.

Thanks to the efforts of 127 full-time employees in 11 offices in multiple states, the bank holds loans and leases worth $360.4 million, including $298.9 million worth of real estate loans. The bank currently holds $392.7 million in deposits from U.S. customers.

Overall, Bankrate believes that, as of December 31, 2017, BlackRidgeBANK exhibited a generally satisfactory condition, earning 3 out of 5 stars for safety and soundness. Here's an analysis of how the bank fared on the three major criteria Bankrate used to grade American banks.

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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 cushion against losses and affords protection for accountholders when a bank is struggling financially. From a safety and soundness perspective, the more capital, the better.

BlackRidgeBANK received a score of 8 out of a possible 30 points on our test to measure capital adequacy, lower than the national average of 13.13.

A bank's Tier 1 capital ratio is a widely used measure of this buffer. BlackRidgeBANK's Tier 1 capital ratio was 10.36 percent, exceeding the 6 percent level considered adequate by regulators, but under the national average of 25.65 percent. The higher the capital ratio, the better the bank will be able to weather financial difficulties.

Overall, BlackRidgeBANK held equity amounting to 11.60 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 problem assets, such as past-due mortgages.

A bank with a large number of these types of assets could eventually be forced to use capital to cover losses, cutting down on its cushion of equity. Many of those assets are also likely to be in non-accrual status and thus aren't earning interest for the bank, decreasing earnings and elevating the chances of a future failure.

On Bankrate's asset quality test, BlackRidgeBANK scored 32 out of a possible 40 points, below the national average of 37.49 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, 1.66 percent of BlackRidgeBANK'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 maintain a reserve to deal with problem assets known as an "allowance for loan and lease losses." That reserve's size can be a useful 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 BlackRidgeBANK's loan loss allowance in its most recent filings.

Earnings score

A bank's profitability has an effect on 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 times of trouble. Conversely, losses reduce a bank's ability to do those things.

BlackRidgeBANK scored 12 out of a possible 30 on Bankrate's test of earnings, failing to reach the national average of 15.12.

Return on equity, calculated by dividing net income (profit, essentially) by the total amount of equity, is one widely used measure of a bank's earnings. The most recent annualized quarterly return on equity for BlackRidgeBANK was 5.60 percent, below the national average of 8.10 percent.

The bank reported net income of $2.9 million on total equity of $51.8 million for the twelve months ended December 31, 2017. The bank had an annualized return on average assets, or ROA, of 0.65 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.