Safe and Sound

Salisbury Bank and Trust Company

Lakeville, CT
4
Star Rating
Salisbury Bank and Trust Company is a Lakeville, CT-based, FDIC-insured bank that opened its doors in 1874. The bank holds equity of $104.4 million on $986.7 million in assets, according to December 31, 2017, regulatory filings.

Thanks to the work of 180 full-time employees in 14 offices in multiple states, the bank has amassed loans and leases worth $802.4 million, including real estate loans of $653.5 million. U.S. bank customers currently have $818.0 million in deposits with the bank.

Overall, Bankrate believes that, as of December 31, 2017, Salisbury Bank and Trust Company 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 major criteria Bankrate used to evaluate American banks.

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THE INSTITUTION'S SCORE

Capital Score

When it comes to measuring an a bank's financial resilience, capital is important. It acts as a cushion against losses and provides protection for accountholders when a bank is struggling financially. When it comes to safety and soundness, more capital is better.

Salisbury Bank and Trust Company scored below the national average of 13.13 on our test to measure the adequacy of a bank's capital, racking up 10 out of a possible 30 points.

One commonly used measure of this buffer is a bank's Tier 1 capital ratio. Salisbury Bank and Trust Company's Tier 1 capital ratio was 11.64 percent, above the 6 percent level considered adequate by regulators, but under the national average of 25.65 percent. A higher capital ratio suggests the bank will be better able to weather financial challenges.

Overall, Salisbury Bank and Trust Company held equity amounting to 10.58 percent of its assets, which was lower than the national average of 12.03 percent.

Asset Quality Score

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

Having a large number of these types of assets could eventually force a bank to use capital to absorb losses, decreasing its equity cushion. Many of those assets are also likely to be in non-accrual status and thus aren't earning money, resulting in reduced earnings and potentially more risk of a failure in the future.

Salisbury Bank and Trust Company scored 36 out of a possible 40 points on Bankrate's asset quality test, falling short of 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, 0.82 percent of Salisbury Bank and Trust Company'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 known as an "allowance for loan and lease losses" to deal with troubled assets . That reserve's size can be a helpful indicator when evaluating a bank's ability to manage problem assets, especially when compared to the total amount of problematic loans. Unfortunately, the FDIC did not provide information on Salisbury Bank and Trust Company's loan loss allowance in its most recent filings.

Earnings score

How profitable a bank is affects its long-term survivability. A bank can retain its earnings, expanding its capital cushion, or use them to address problematic loans, likely making the bank better able to withstand economic shocks. Conversely, losses reduce a bank's ability to do those things.

On Bankrate's earnings test, Salisbury Bank and Trust Company scored 14 out of a possible 30, lower than the national average of 15.12.

One important measure of a bank's earnings is return on equity, or net income (profit, essentially) divided by the total amount of equity. Salisbury Bank and Trust Company's most recent annualized quarterly return on equity was 6.77 percent, below the national average of 8.10 percent.

For the twelve months ended December 31, 2017, the bank reported net income of $7.0 million on total equity of $104.4 million. The bank experienced an annualized return on average assets, or ROA, of 0.73 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.