Safe and Sound

The Simsbury Bank & Trust Company

Simsbury, CT
4
Star Rating
The Simsbury Bank & Trust Company is a Simsbury, CT-based, FDIC-insured bank started in 1995. Regulatory filings show the bank having equity of $38.6 million on $504.1 million in assets, as of December 31, 2017.

Thanks to the work of 70 full-time employees in 6 offices in CT, the bank currently holds loans and leases worth $394.1 million, including $301.7 million worth of real estate loans. The bank currently holds $457.5 million in deposits from U.S. customers.

Overall, Bankrate believes that, as of December 31, 2017, The Simsbury Bank & Trust Company exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Here's a look at how the bank did on the three important criteria Bankrate used to evaluate U.S. banks.

WHAT IS
SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

When it comes to measuring an a bank's financial stability, capital is useful. It acts as a cushion against losses and as protection for depositors when a bank is struggling financially. From a safety and soundness perspective, the higher the capital, the better.

On our test to measure capital adequacy, The Simsbury Bank & Trust Company received a score of 6 out of a possible 30 points, coming in below the national average of 13.13.

One commonly used measure of this buffer is a bank's Tier 1 capital ratio. The Simsbury Bank & Trust Company's Tier 1 capital ratio was 10.89 percent, exceeding 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 stand up to economic downturns.

Overall, The Simsbury Bank & Trust Company held equity amounting to 7.66 percent of its assets, which was lower than the national average of 12.03 percent.

Asset Quality Score

This test is intended to estimate how the bank's reserves set aside to cover loan losses, as well as overall capitalization, could be affected by problem assets, such as past-due mortgages.

Having large numbers of these kinds of assets means a bank could eventually have to use capital to cover losses, cutting down on 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, pushing down earnings and increasing the risk of a future failure.

The Simsbury Bank & Trust Company beat out the national average of 37.49 on Bankrate's test of asset quality, racking up 40 out of a possible 40 points .

A helpful indicator of asset quality is the percentage of problem assets a bank holds compared to its total assets. As of December 31, 2017, 0.37 percent of The Simsbury Bank & 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 maintain a reserve to handle problem assets known as an "allowance for loan and lease losses." The size of that reserve can be a handy 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 The Simsbury Bank & 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, giving a boost to its capital cushion, or use them to address problematic loans, likely making the bank better prepared to withstand financial shocks. Conversely, losses take away from a bank's ability to do those things.

The Simsbury Bank & Trust Company did above-average on Bankrate's earnings test, achieving a score of 16 out of a possible 30.

One key way to measure a bank's earnings is return on equity, or net income (profit, essentially) divided by total equity. The Simsbury Bank & Trust Company's most recent annualized quarterly return on equity was 7.95 percent, below the national average of 8.10 percent.

For the twelve months ended December 31, 2017, the bank reported net income of $3.0 million on total equity of $38.6 million. The bank reported an annualized return on average assets, or ROA, of 0.59 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.