Safe and Sound

Radius Bank

Boston, MA
3
Star Rating
Radius Bank is an FDIC-insured bank started in 1987 and currently headquartered in Boston, MA.1,142,656 As of December 31, 2017, the bank had equity of $106.8 million on $1.14 billion in assets.

U.S. bank customers have $954.4 million on deposit at 3 offices in multiple states run by 152 full-time employees. With that footprint, the bank has amassed loans and leases worth $788.9 million, including $408.9 million worth of real estate loans.

Overall, Bankrate believes that, as of December 31, 2017, Radius Bank exhibited a generally satisfactory condition, earning 3 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 grade American banks.

WHAT IS
SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

Capital acts as a cushion against losses and as protection for depositors during times of financial trouble for the bank. Therefore, when it comes to measuring an an institution's financial resilience, capital is crucial. When it comes to safety and soundness, the more capital, the better.

Radius Bank received a score of 8 out of a possible 30 points on our test to measure capital adequacy, less than the national average of 13.19.

A bank's Tier 1 capital ratio is an important measure of this buffer. Radius Bank's Tier 1 capital ratio was 13.95 percent, above the 6 percent level considered adequate by regulators, but under the national average of 25.67 percent. A higher capital ratio means the bank will be better able to stand up to financial downturns.

Overall, Radius Bank held equity amounting to 9.35 percent of its assets, which was lower than the national average of 12.04 percent.

Asset Quality Score

In this test, Bankrate tries to determine the impact of troubled assets, such as past-due mortgages, on the bank's capitalization and allocated loan loss reserves.

Having lots of these types of assets could eventually require a bank to use capital to cover losses, cutting down on its equity buffer. It also means that there are likely to be many assets that are in non-accrual status and thus aren't earning interest for the bank, decreasing earnings and elevating the chances of a future failure.

Radius Bank scored 36 out of a possible 40 points on Bankrate's test of asset quality, coming in below the national average of 37.70.

The percentage of problem assets a bank holds compared to its total assets is a handy indicator of asset quality.As of December 31, 2017, 1.46 percent of Radius 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 1.14 percent.

Banks maintain a reserve known as an "allowance for loan and lease losses" to deal with problem assets . The size of that reserve can be a helpful indicator when evaluating a bank's ability to manage troubled assets, especially when compared to the total amount of problem loans. Unfortunately, the FDIC did not provide information on Radius Bank's loan loss allowance in its most recent filings.

Earnings score

How profitable a bank is has an effect on 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 more resilient in times of trouble. Losses, on the other hand, take away from a bank's ability to do those things.

On Bankrate's test of earnings, Radius Bank scored 4 out of a possible 30, lower than the national average of 16.06.

Return on equity, calculated by dividing net income (profit, essentially) by the total amount of equity, is one key measure of a bank's earnings. Radius Bank's most recent annualized quarterly return on equity was 2.01 percent, below the national average of 8.10 percent.

The bank earned net income of $2.0 million on total equity of $106.8 million for the twelve months ended December 31, 2017. The bank had an annualized return on average assets, or ROA, of 0.19 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.