Asset Quality Score
In this test, Bankrate tries to estimate the impact of problem assets, such as unpaid mortgages, on the bank's loan loss reserves and overall capitalization.
Having extensive holdings of these kinds of assets suggests a bank could eventually have to use capital to cover losses, diminishing 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, resulting in lower earnings and potentially more risk of a future failure.
On Bankrate's test of asset quality, Manufacturers Bank scored 40 out of a possible 40 points, beating out 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, 0.02 percent of Manufacturers 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 reserve's size to the total amount of at-risk loans can be a helpful indicator when evaluating a bank's ability to manage troubled assets. Manufacturers Bank's loan loss allowance was 8,394.49 percent of its total noncurrent loans, exceeding the national average. All things being equal, the higher the ratio of loan loss allowance to noncurrent loans, the better.