Safe and Sound

The Adirondack Trust Company

Saratoga Springs, NY
4
Star Rating
Started in 1901, The Adirondack Trust Company is an FDIC-insured bank headquartered in Saratoga Springs, NY. Regulatory filings show the bank having equity of $113.5 million on $1.21 billion in assets, as of December 31, 2017.

With 243 full-time employees in 13 offices in NY, the bank currently holds loans and leases worth $726.9 million, including real estate loans of $552.3 million. U.S. bank customers currently have $1.06 billion in deposits with the bank.

Overall, Bankrate believes that, as of December 31, 2017, The Adirondack Trust Company 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.

WHAT IS
SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

Capital acts as a cushion against losses and provides protection for account holders when a bank is experiencing financial trouble. It follows then that when it comes to measuring an an institution's financial stability, capital is crucial. When it comes to safety and soundness, the higher the capital, the better.

The Adirondack Trust Company came in below the national average of 13.13 on our test to measure the adequacy of a bank's capital, scoring 6 out of a possible 30 points.

One way to measure this buffer is looking at a bank's Tier 1 capital ratio. The Adirondack Trust Company's Tier 1 capital ratio was 12.83 percent, higher than the 6 percent level considered adequate by regulators, but under the national average of 25.65 percent. The higher the capital ratio, the better the bank will be able to weather economic challenges.

Overall, The Adirondack Trust Company held equity amounting to 9.37 percent of its assets, which was lower than the national average of 12.03 percent.

Asset Quality Score

Bankrate uses this test to determine the impact of problem assets, such as past-due mortgages, on the bank's capitalization and allocated loan loss reserves.

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

The Adirondack Trust Company scored 40 out of a possible 40 points on Bankrate's asset quality test, better than the national average of 37.49.

The percentage of problem assets a bank holds compared to its total assets is a widely used indicator of asset quality.As of December 31, 2017, 0.44 percent of The Adirondack 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 . Comparing the size of that reserve to the total amount of problematic loans can be a widely used indicator when evaluating a bank's ability to manage problem assets. Unfortunately, the FDIC did not provide information on The Adirondack Trust Company's loan loss allowance in its most recent filings.

Earnings score

A bank's earnings performance has an effect on its safety and soundness. A bank can retain its earnings, increasing its capital buffer, or put them to work addressing problematic loans, potentially making the bank more resilient in times of trouble. Obviously, banks that are losing money are less able to do those things.

The Adirondack Trust Company scored 14 out of a possible 30 on Bankrate's test of earnings, less than the national average of 15.12.

One key measure of a bank's earnings is return on equity, or net income (essentially profit) divided by the total amount of equity. The most recent annualized quarterly return on equity for The Adirondack Trust Company was 6.75 percent, below the national average of 8.10 percent.

For the twelve months ended December 31, 2017, the bank recorded net income of $7.6 million on total equity of $113.5 million. The bank reported an annualized return on average assets, or ROA, of 0.66 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.