Safe and Sound

Hometown Bank of the Hudson Valley

Walden, NY
NR
Star Rating
Founded in 1919, Hometown Bank of the Hudson Valley is an FDIC-insured bank based in Walden, NY. The bank has equity of $7.0 million on $115,400,000 in assets, according to June 30, 2017, regulatory filings.

U.S. bank customers have $99.9 million on deposit at 4 offices in NY run by 36 full-time employees. With that footprint, the bank currently holds loans and leases worth $101.2 million, including real estate loans of $99.3 million.

Overall, Bankrate did not have enough information on this institution to give it a star rating. Keep reading for a breakdown of how the bank did on the three major criteria Bankrate used to grade U.S. banks.

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THE INSTITUTION'S SCORE

Capital Score

When it comes to measuring an an institution's financial strength, capital is key. It works as a bulwark against losses and as protection for depositors when a bank is struggling financially. When it comes to safety and soundness, the more capital, the better.
On our test to measure the adequacy of a bank's capital, Hometown Bank of the Hudson Valley received a score of 2 out of a possible 30 points, failing to reach the national average of 13.38.

A bank's Tier 1 capital ratio is a commonly used measure of this buffer. Hometown Bank of the Hudson Valley's Tier 1 capital ratio was 8.00 percent, exceeding the 6 percent level regulators consider adequate, but under the national average of 25.16 percent. A higher capital ratio suggests the bank will be better able to weather financial challenges.

Overall, Hometown Bank of the Hudson Valley held equity amounting to 6.10 percent of its assets, which was lower than the national average of 12.10 percent.

Asset Quality Score

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

Having a large number of these kinds of assets means a bank could have to use capital to absorb losses, reducing its buffer 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 elevating the risk of a future failure.

Hometown Bank of the Hudson Valley fell short of the national average of 37.62 on Bankrate's asset quality test, racking up 8 out of a possible 40 points .

A widely used indicator of asset quality is the percentage of problem assets a bank holds compared to its total assets. As of June 30, 2017, 3.97 percent of Hometown Bank of the Hudson Valley'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 to deal with troubled assets known as an "allowance for loan and lease losses." The size of that reserve can be a helpful indicator when evaluating a bank's ability to manage problem assets, especially when compared to the total amount of at-risk loans. Unfortunately, the FDIC did not provide information on Hometown Bank of the Hudson Valley's loan loss allowance in its most recent filings.

Earnings score

A bank's ability to earn money affects its long-term survivability. A bank can retain its earnings, expanding its capital cushion, or put them to work addressing problematic loans, likely making the bank more resilient in tough times. Losses, on the other hand, reduce a bank's ability to do those things.

Hometown Bank of the Hudson Valley scored 0 out of a possible 30 on Bankrate's test of earnings, below 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. Hometown Bank of the Hudson Valley's most recent annualized quarterly return on equity was -7.82 percent, below the national average of 9.28 percent.

The bank recorded net income of $-280,000 on total equity of $7.0 million for the twelve months ended June 30, 2017. The bank reported an annualized return on average assets, or ROA, of -0.47 percent, below the 1 percent deemed satisfactory in accordance with industry standards and below 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.