Safe and Sound

Kopernik Bank

Baltimore, MD
5
Star Rating
Started in 1924, Kopernik Bank is an FDIC-insured bank headquartered in Baltimore, MD. The bank holds equity of $37.3 million on $165.6 million in assets, according to December 31, 2017, regulatory filings.

U.S. bank customers have $120.8 million on deposit at 5 offices in MD run by 24 full-time employees. With that footprint, the bank has amassed loans and leases worth $108.7 million, $108.7 million of which are for real estate.

Overall, Bankrate believes that, as of December 31, 2017, Kopernik Bank exhibited a superior condition, earning a full 5 stars for safety and soundness. Keep reading for an analysis of how the bank did on the three important criteria Bankrate used to score U.S. banks on safety and soundness.

WHAT IS
SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

When it comes to measuring an an institution's financial fortitude, capital is crucial. It acts as a cushion against losses and as protection for accountholders when a bank is struggling financially. When it comes to safety and soundness, the higher the capital, the better.

Kopernik Bank did better than the national average of 13.13 points on our test to measure capital adequacy, scoring 30 out of a possible 30 points.

One way to measure this buffer is looking at a bank's Tier 1 capital ratio. Kopernik Bank's Tier 1 capital ratio was 44.68 percent, exceeding the 6 percent level considered adequate by regulators, and higher than the national average of 25.65 percent. A higher capital ratio suggests the bank will be better able to weather economic headwinds.

Overall, Kopernik Bank held equity amounting to 22.52 percent of its assets, which exceeded the national average of 12.03 percent.

Asset Quality Score

Bankrate uses this test to determine the impact of troubled assets, such as unpaid mortgages, on the bank's capitalization and allocated loan loss reserves.

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

Kopernik Bank scored below the national average of 37.49 on Bankrate's test of asset quality, racking up 36 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, 3.35 percent of Kopernik 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 maintain a reserve to deal with problem assets known as an "allowance for loan and lease losses." Comparing how large that reserve is to the total amount of at-risk loans can be a useful indicator when evaluating a bank's ability to manage problem assets. Unfortunately, the FDIC did not provide information on Kopernik Bank's loan loss allowance in its most recent filings.

Earnings score

A bank's ability to earn money affects its long-term survivability. Earnings can be retained by the bank, giving a boost to its capital buffer, or be used to address problematic loans, potentially making the bank better able to withstand economic trouble. However, banks that are losing money are less able to do those things.

Kopernik Bank beat the national average on Bankrate's earnings test, achieving a score of 18 out of a possible 30.

One widely used measure of a bank's earnings is return on equity, or net income (essentially profit) divided by the total amount of equity. Kopernik Bank's most recent annualized quarterly return on equity was 16.06 percent, above the national average of 8.10 percent.

The bank recorded net income of $3.6 million on total equity of $37.3 million for the twelve months ended December 31, 2017. The bank reported an annualized return on average assets, or ROA, of 3.30 percent, above the 1 percent deemed satisfactory in accordance with industry standards, and above 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.