Safe and Sound

HSBC Trust Company (Delaware), National Association

Wilmington, DE
5
Star Rating
Wilmington, DE-based HSBC Trust Company (Delaware), National Association is an FDIC-insured bank started in 2005. The bank has equity of $53.7 million on $54,708,000 in assets, according to June 30, 2017, regulatory filings.

Thanks to the efforts of 5 full-time employees, the bank has amassed loans and leases worth $0, including $0 worth of real estate loans. U.S. bank customers currently have $500,000 in deposits with the bank.

Overall, Bankrate believes that, as of June 30, 2017, HSBC Trust Company (Delaware), National Association exhibited a superior condition, earning a full 5 stars for safety and soundness. Here's a breakdown of how the bank faired on the three key criteria Bankrate used to grade American banks on safety and soundness.

WHAT IS
SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

Capital acts as a buffer against losses and provides protection for depositors during periods of financial trouble for the bank. Therefore, when it comes to measuring an an institution's financial fortitude, capital is useful. When it comes to safety and soundness, the more capital, the better.
HSBC Trust Company (Delaware), National Association racked up 30 out of a possible 30 points on our test to measure capital adequacy, above the national average of 13.38.

One essential measure of this buffer is a bank's Tier 1 capital ratio. HSBC Trust Company (Delaware), National Association's Tier 1 capital ratio was 33,768.55 percent, above the 6 percent level considered adequate by regulators, and higher than the national average of 25.16 percent. A higher capital ratio means the bank will be better able to weather financial challenges.

Overall, HSBC Trust Company (Delaware), National Association held equity amounting to 98.14 percent of its assets, which exceeded the national average of 12.10 percent.

Asset Quality Score

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

A bank with extensive holdings of these types of assets could eventually be forced to use capital to absorb losses, diminishing 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 diminished earnings and potentially more risk of a future failure.

HSBC Trust Company (Delaware), National Association exceeded the national average of 37.62 on Bankrate's asset quality test, racking up 40 out of a possible 40 points .

The percentage of problem assets a bank holds compared to its total assets is a helpful indicator of asset quality.

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 helpful indicator when evaluating a bank's ability to manage troubled assets. Unfortunately, the FDIC did not provide information on HSBC Trust Company (Delaware), National Association's loan loss allowance in its most recent filings.

Earnings score

How profitable a bank is has an effect on its long-term survivability. A bank can retain its earnings, increasing its capital buffer, or use them to address problematic loans, likely making the bank better prepared to withstand economic trouble. Losses, on the other hand, take away from a bank's ability to do those things.

On Bankrate's test of earnings, HSBC Trust Company (Delaware), National Association scored 4 out of a possible 30, lower than the national average of 16.52.

Return on equity, calculated by dividing net income (profit, basically) by total equity, is one important way to measure a bank's earnings. The most recent annualized quarterly return on equity for HSBC Trust Company (Delaware), National Association was 1.20 percent, below the national average of 9.28 percent.

For the twelve months ended June 30, 2017, the bank reported net income of $322,000 on total equity of $53.7 million. The bank experienced an annualized return on average assets, or ROA, of 1.18 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.