Safe and Sound

Hamlin Bank and Trust Company

Smethport, PA
5
Star Rating
Smethport, PA-based Hamlin Bank and Trust Company is an FDIC-insured bank founded in 1863. The bank has equity of $83.0 million on $442,190,000 in assets, according to June 30, 2017, regulatory filings.

Thanks to the efforts of 86 full-time employees in 8 offices in multiple states, the bank currently holds loans and leases worth $222.0 million, $195.7 million of which are for real estate. The bank currently holds $344.5 million in deposits from U.S. customers.

Overall, Bankrate believes that, as of June 30, 2017, Hamlin Bank and Trust Company exhibited a superior condition, earning a full 5 stars for safety and soundness. Keep reading for a breakdown of how the bank faired on the three key criteria Bankrate used to grade U.S. banks on safety and soundness.

WHAT IS
SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

Capital is an essential measurement of a bank's financial fortitude. It acts as a buffer against losses and provides protection for accountholders when a bank is experiencing financial instability. From a safety and soundness perspective, the higher the capital, the better.
Hamlin Bank and Trust Company did better than the national average of 13.38 points on our test to measure the adequacy of a bank's capital, scoring 28 out of a possible 30 points.

One important measure of this buffer is a bank's Tier 1 capital ratio. Hamlin Bank and Trust Company's Tier 1 capital ratio was 22.00 percent, exceeding the 6 percent level regulators consider adequate, but lower than the national average of 25.16 percent. A higher capital ratio suggests the bank will be better able to stand up to financial headwinds.

Overall, Hamlin Bank and Trust Company held equity amounting to 18.76 percent of its assets, which exceeded the national average of 12.10 percent.

Asset Quality Score

This test's purpose is to estimate how the bank's reserves set aside to cover loan losses, as well as overall capitalization could be affected by troubled assets, such as unpaid loans.

A bank with large numbers of these types of assets may eventually be required to use capital to cover losses, shrinking its cushion of equity. 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, resulting in reduced earnings and potentially more risk of a failure in the future.

On Bankrate's test of asset quality, Hamlin Bank and Trust Company scored 40 out of a possible 40 points, better than the national average of 37.62 points.

The percentage of problem assets a bank holds compared to its total assets is a useful indicator of asset quality.As of June 30, 2017, 1.89 percent of Hamlin Bank and Trust Company'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 1.04 percent.

Banks keep a reserve known as an "allowance for loan and lease losses" to deal with problem assets . Comparing the how large that reserve is to the total amount of at-risk loans can be a handy indicator when evaluating a bank's ability to manage troubled assets. Unfortunately, the FDIC did not provide information on Hamlin Bank and Trust Company's loan loss allowance in its most recent filings.

Earnings score

A bank's earnings performance has an effect on its safety and soundness. A bank can retain its earnings, giving a boost to its capital cushion, or use them to address problematic loans, potentially making the bank better prepared to withstand financial shocks. Conversely, losses lessen a bank's ability to do those things.

Hamlin Bank and Trust Company scored 14 out of a possible 30 on Bankrate's earnings test, failing to reach the national average of 16.52.

One important measure of a bank's earnings is return on equity, calculated by dividing net income (essentially profit) by total equity. The most recent annualized quarterly return on equity for Hamlin Bank and Trust Company was 6.82 percent, below the national average of 9.28 percent.

The bank earned net income of $2.8 million on total equity of $83.0 million for the twelve months ended June 30, 2017. The bank had an annualized return on average assets, or ROA, of 1.25 percent, above the 1 percent deemed satisfactory in accordance with industry standards, and above the average for U.S. banks of 1.14 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.