Safe and Sound

Darien Rowayton Bank

3
Star Rating
Darien Rowayton Bank is a Darien, CT-based, FDIC-insured bank founded in 2006. Regulatory filings show the bank having equity of $75.0 million on assets of $668.3 million, as of December 31, 2017.

U.S. bank customers have $523.7 million on deposit at 3 offices in CT run by 184 full-time employees. With that footprint, the bank currently holds loans and leases worth $473.1 million, $198.8 million of which are for real estate.

Overall, Bankrate believes that, as of December 31, 2017, Darien Rowayton 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 major criteria Bankrate used to evaluate U.S. banks.

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THE INSTITUTION'S SCORE

Capital Score

Capital is an essential measurement of a bank's financial fortitude. It works as a cushion against losses and affords protection for accountholders during periods of economic trouble for the bank. When looking at safety and soundness, more capital is better.

Darien Rowayton Bank came in below the national average of 13.13 on our test to measure the adequacy of a bank's capital, receiving a score of 10 out of a possible 30 points.

A bank's Tier 1 capital ratio is an important measure of this buffer. Darien Rowayton Bank's Tier 1 capital ratio was 10.11 percent, exceeding the 6 percent level considered adequate by regulators, but less 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 challenges.

Overall, Darien Rowayton Bank held equity amounting to 11.22 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 reserves set aside to cover loan losses, as well as overall capitalization, could be affected by problem assets, such as unpaid mortgages.

A bank with large numbers of these types of assets may eventually have to use capital to absorb losses, cutting down on its cushion of equity. Many of those assets are also likely to be in non-accrual status and no longer earning money, resulting in reduced earnings and potentially more risk of a failure in the future.

Darien Rowayton Bank scored 40 out of a possible 40 points on Bankrate's test of asset quality, beating 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, 0.08 percent of Darien Rowayton Bank's loans were noncurrent -- in other words, 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 keep a reserve to handle problem assets known as an "allowance for loan and lease losses." Comparing the size of that reserve to the total amount of problem loans can be a widely used indicator when evaluating a bank's ability to manage problem assets. Unfortunately, the FDIC did not provide information on Darien Rowayton Bank's loan loss allowance in its most recent filings.

Earnings score

A bank's profitability affects its long-term survivability. Earnings may be retained by the bank, giving a boost to its capital buffer, or be used to address problematic loans, likely making the bank better able to withstand economic trouble. Losses, on the other hand, lessen a bank's ability to do those things.

Darien Rowayton Bank fell short of the national average on Bankrate's test of earnings, achieving a score of 0 out of a possible 30.

Return on equity, calculated by dividing net income (profit, essentially) by total equity, is one important way to measure a bank's earnings. The most recent annualized quarterly return on equity for Darien Rowayton Bank was -3.03 percent, below the national average of 8.10 percent.

The bank earned net income of $-1.9 million on total equity of $75.0 million for the twelve months ended December 31, 2017. The bank reported an annualized return on average assets, or ROA, of -0.31 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.