Safe and Sound

BNY Mellon Trust of Delaware

Wilmington, DE
5
Star Rating
BNY Mellon Trust of Delaware is a Wilmington, DE-based, FDIC-insured bank that opened its doors in 1983. Regulatory filings show the bank having equity of $77.0 million on $117.6 million in assets, as of December 31, 2017.

Thanks to the efforts of 14 full-time employees, the bank has amassed loans and leases worth $26.7 million, including $27.0 million worth of real estate loans. U.S. bank customers currently have $34.7 million in deposits with the bank.

Overall, Bankrate believes that, as of December 31, 2017, BNY Mellon Trust of Delaware 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 American banks on safety and soundness.

WHAT IS
SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

Capital is a useful measurement of a bank's financial strength. It works as a cushion against losses and affords protection for depositors during times of economic trouble for the bank. When it comes to safety and soundness, the higher the capital, the better.

BNY Mellon Trust of Delaware racked up 30 out of a possible 30 points on our test to measure the adequacy of a bank's capital, above the national average of 13.13.

A bank's Tier 1 capital ratio is an essential measure of this buffer. BNY Mellon Trust of Delaware's Tier 1 capital ratio was 98.83 percent, higher than the 6 percent level regulators consider adequate, and above the national average of 25.65 percent. A higher capital ratio means the bank will be better able to weather economic difficulties.

Overall, BNY Mellon Trust of Delaware held equity amounting to 65.51 percent of its assets, which exceeded the national average of 12.03 percent.

Asset Quality Score

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

Having lots of these types of assets could eventually force a bank to use capital to absorb losses, diminishing 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 money, resulting in lower earnings and potentially more risk of a future failure.

BNY Mellon Trust of Delaware came in below the national average of 37.49 on Bankrate's test of asset quality, racking up 36 out of a possible 40 points .

A helpful indicator of asset quality is the percentage of problem assets a bank holds compared to its total assets. As of December 31, 2017, 11.06 percent of BNY Mellon Trust of Delaware's loans were noncurrent, meaning 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 keep a reserve known as an "allowance for loan and lease losses" to deal with troubled assets . How large that reserve is can be a helpful indicator when evaluating a bank's ability to manage troubled assets, especially when compared to the total amount of at-risk loans. Unfortunately, the FDIC did not provide information on BNY Mellon Trust of Delaware's loan loss allowance in its most recent filings.

Earnings score

A bank's profitability affects its safety and soundness. Earnings can be retained by the bank, increasing its capital buffer, or be used to deal with problematic loans, likely making the bank more resilient in tough times. Losses, on the other hand, lessen a bank's ability to do those things.

On Bankrate's earnings test, BNY Mellon Trust of Delaware scored 10 out of a possible 30, below the national average of 15.12.

One widely used measure of a bank's earnings is return on equity, or net income (profit, basically) divided by total equity. BNY Mellon Trust of Delaware's most recent annualized quarterly return on equity was 4.90 percent, below the national average of 8.10 percent.

For the twelve months ended December 31, 2017, the bank reported net income of $3.8 million on total equity of $77.0 million. The bank experienced an annualized return on average assets, or ROA, of 3.17 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.