Safe and Sound

American Savings Bank

Middletown, OH
5
Star Rating
American Savings Bank is a Middletown, OH-based, FDIC-insured bank founded in 1889. As of June 30, 2017, the bank held equity of $7.8 million on $43,204,000 in assets.

U.S. bank customers have $32.6 million on deposit at 2 offices in OH run by 11 full-time employees. With that footprint, the bank currently holds loans and leases worth $33.7 million, including real estate loans of $30.6 million.

Overall, Bankrate believes that, as of June 30, 2017, American Savings Bank exhibited a superior condition, earning a full 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 on safety and soundness.

WHAT IS
SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

Capital acts as a buffer against losses and provides protection for accountholders when a bank is experiencing economic trouble. Therefore, a bank's level of capital is an important measurement of a bank's financial strength. From a safety and soundness perspective, more capital is preferred.
On our test to measure capital adequacy, American Savings Bank scored 28 out of a possible 30 points, exceeding the national average of 13.38.

A bank's Tier 1 capital ratio is an important measure of this buffer. American Savings Bank's Tier 1 capital ratio was 28.20 percent, exceeding the 6 percent level regulators consider adequate, and above the national average of 25.16 percent. The higher the capital ratio, the better the bank will be able to weather financial headwinds.

Overall, American Savings Bank held equity amounting to 18.11 percent of its assets, which exceeded the national average of 12.10 percent.

Asset Quality Score

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

Having a large number of these types of assets may eventually require a bank 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 money, decreasing earnings and elevating the risk of a failure in the future.

American Savings Bank scored 40 out of a possible 40 points on Bankrate's asset quality test, beating the national average of 37.62.

A helpful indicator of asset quality is the percentage of problem assets a bank holds compared to its total assets. As of June 30, 2017, 0.26 percent of American Savings Bank's loans were noncurrent -- in other words, they were more than 90 days past due or were in non-accrual status. That's below the national average of 1.04 percent.

Banks keep a reserve to deal with problem 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 problem loans. Unfortunately, the FDIC did not provide information on American Savings Bank's loan loss allowance in its most recent filings.

Earnings score

How profitable a bank is affects its safety and soundness. Earnings can be retained by the bank, increasing its capital buffer, or be used to deal with problematic loans, potentially making the bank more resilient in times of trouble. Conversely, losses diminish a bank's ability to do those things.

On Bankrate's earnings test, American Savings Bank scored 4 out of a possible 30, falling short of the national average of 16.52.

One key measure of a bank's earnings is return on equity, calculated by dividing net income (essentially profit) by the total amount of equity. The most recent annualized quarterly return on equity for American Savings Bank was 1.10 percent, below the national average of 9.28 percent.

The bank reported net income of $43,000 on total equity of $7.8 million for the twelve months ended June 30, 2017. The bank had an annualized return on average assets, or ROA, of 0.20 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.