Safe and Sound

Rondout Savings Bank

Kingston, NY
4
Star Rating
Rondout Savings Bank is a Kingston, NY-based, FDIC-insured bank started in 1868. Regulatory filings show the bank having equity of $35.9 million on $351.1 million in assets, as of December 31, 2017.

Thanks to the work of 77 full-time employees in 5 offices in NY, the bank has amassed loans and leases worth $256.5 million, $241.4 million of which are for real estate. U.S. bank customers currently have $297.7 million in deposits with the bank.

Overall, Bankrate believes that, as of December 31, 2017, Rondout Savings Bank exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Here's an analysis of how the bank did on the three key criteria Bankrate used to score American banks.

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THE INSTITUTION'S SCORE

Capital Score

Capital works as a cushion against losses and affords protection for depositors during periods of financial instability for the bank. It follows then that when it comes to measuring an a bank's financial fortitude, capital is crucial. From a safety and soundness perspective, the higher the capital, the better.

Rondout Savings Bank scored below the national average of 13.13 on our test to measure the adequacy of a bank's capital, receiving a score of 10 out of a possible 30 points.

A bank's Tier 1 capital ratio is a commonly used measure of this buffer. Rondout Savings Bank's Tier 1 capital ratio was 17.00 percent, above the 6 percent level regulators consider adequate, but under the national average of 25.65 percent. The higher the capital ratio, the better the bank will be able to weather financial downturns.

Overall, Rondout Savings Bank held equity amounting to 10.23 percent of its assets, which was lower than the national average of 12.03 percent.

Asset Quality Score

This test is intended to try to understand how the bank's loan loss reserves and overall capitalization could be affected by problem assets, such as past-due mortgages.

Having lots of these types of assets suggests a bank may eventually have to use capital to absorb losses, cutting down on its equity cushion. Many of those assets are also likely to be in non-accrual status and no longer earning interest for the bank, decreasing earnings and increasing the risk of a future failure.

Rondout Savings Bank scored 40 out of a possible 40 points on Bankrate's test of asset quality, above the national average of 37.49.

A handy indicator of asset quality is the percentage of problem assets a bank holds compared to its total assets. As of December 31, 2017, 1.02 percent of Rondout Savings Bank'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 problem assets . Comparing the size of that reserve to the total amount of problematic loans can be a helpful indicator when evaluating a bank's ability to manage problem assets. Unfortunately, the FDIC did not provide information on Rondout Savings Bank's loan loss allowance in its most recent filings.

Earnings score

How profitable a bank is affects its safety and soundness. A bank can retain its earnings, expanding its capital buffer, or use them to deal with problematic loans, potentially making the bank better prepared to withstand financial trouble. Conversely, losses reduce a bank's ability to do those things.

Rondout Savings Bank did below-average on Bankrate's earnings test, achieving a score of 6 out of a possible 30.

One key measure of a bank's earnings is return on equity, or net income (profit, basically) divided by the total amount of equity. The most recent annualized quarterly return on equity for Rondout Savings Bank was 2.62 percent, below the national average of 8.10 percent.

The bank reported net income of $927,000 on total equity of $35.9 million for the twelve months ended December 31, 2017. The bank had an annualized return on average assets, or ROA, of 0.27 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.