Safe and Sound

Champlain National Bank

Elizabethtown, NY
4
Star Rating
Founded in 1934, Champlain National Bank is an FDIC-insured bank based in Elizabethtown, NY. The bank has equity of $25.4 million on assets of $331.0 million, according to December 31, 2017, regulatory filings.

Thanks to the work of 74 full-time employees in 10 offices in NY, the bank has amassed loans and leases worth $231.1 million, $181.3 million of which are for real estate. U.S. bank customers currently have $297.1 million in deposits with the bank.

Overall, Bankrate believes that, as of December 31, 2017, Champlain National Bank exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Keep reading for a look at how the bank did on the three important criteria Bankrate used to grade American banks.

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SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

Capital acts as a bulwark against losses and as protection for account holders when a bank is struggling financially. Therefore, when it comes to measuring an an institution's financial fortitude, capital is essential. When looking at safety and soundness, the higher the capital, the better.

On our test to measure the adequacy of a bank's capital, Champlain National Bank received a score of 6 out of a possible 30 points, falling short of the national average of 13.13.

A bank's Tier 1 capital ratio is a widely followed measure of this buffer. Champlain National Bank's Tier 1 capital ratio was 11.94 percent, above the 6 percent level regulators consider adequate, but lower than the national average of 25.65 percent. The higher the capital ratio, the better the bank will be able to stand up to financial downturns.

Overall, Champlain National Bank held equity amounting to 7.67 percent of its assets, which was lower than the national average of 12.03 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 mortgages.

Having large numbers of these types of assets could eventually force a bank to use capital to cover losses, cutting down on its cushion of equity. Many of those assets are also likely to be in non-accrual status and thus aren't earning interest for the bank, diminishing earnings and increasing the risk of a future failure.

Champlain National Bank scored 40 out of a possible 40 points on Bankrate's test of asset quality, beating out the national average of 37.49.

A useful indicator of asset quality is the percentage of problem assets a bank holds compared to its total assets. As of December 31, 2017, 0.43 percent of Champlain National Bank's loans were noncurrent, meaning 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 deal with problem assets known as an "allowance for loan and lease losses." That reserve's size can be a widely used 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 Champlain National Bank's loan loss allowance in its most recent filings.

Earnings score

How profitable a bank is affects its long-term survivability. Earnings can be retained by the bank, giving a boost to its capital buffer, or be used to deal with problematic loans, likely making the bank better prepared to withstand economic trouble. However, banks that are losing money are less able to do those things.

On Bankrate's earnings test, Champlain National Bank scored 18 out of a possible 30, better than the national average of 15.12.

Return on equity, calculated by dividing net income (profit, basically) by the total amount of equity, is one important way to measure a bank's earnings. Champlain National Bank's most recent annualized quarterly return on equity was 8.76 percent, above the national average of 8.10 percent.

The bank earned net income of $2.1 million on total equity of $25.4 million for the twelve months ended December 31, 2017. The bank reported an annualized return on average assets, or ROA, of 0.65 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.