Safe and Sound

Compass Savings Bank

3
Star Rating
Wilmerding, PA-based Compass Savings Bank is an FDIC-insured bank founded in 1934. The bank has equity of $5.1 million on $56.0 million in assets, according to December 31, 2017, regulatory filings.

Thanks to the efforts of 7 full-time employees, the bank currently holds loans and leases worth $49.2 million, $49.0 million of which are for real estate. The bank currently holds $47.2 million in deposits from U.S. customers.

Overall, Bankrate believes that, as of December 31, 2017, Compass Savings Bank exhibited a generally satisfactory condition, earning 3 out of 5 stars for safety and soundness. Here's a breakdown of how the bank did on the three major criteria Bankrate used to grade American banks.

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THE INSTITUTION'S SCORE

Capital Score

Capital is a useful measurement of a bank's financial strength. It acts as a buffer against losses and affords protection for accountholders when a bank is struggling financially. When it comes to safety and soundness, more capital is preferred.

On our test to measure capital adequacy, Compass Savings Bank received a score of 8 out of a possible 30 points, below the national average of 13.13.

One essential measure of this buffer is a bank's Tier 1 capital ratio. Compass Savings Bank's Tier 1 capital ratio was 15.83 percent, exceeding the 6 percent level regulators consider adequate, but below the national average of 25.65 percent. A higher capital ratio suggests the bank will be better able to stand up to financial difficulties.

Overall, Compass Savings Bank held equity amounting to 9.09 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 reserves set aside to cover loan losses, as well as overall capitalization, could be affected by troubled assets, such as unpaid loans.

A bank with large numbers of these kinds of assets could eventually be forced to use capital to absorb losses, decreasing its equity cushion. Many of those assets are also likely to be in non-accrual status and no longer earning interest for the bank, diminishing earnings and increasing the chances of a future failure.

Compass Savings Bank scored 36 out of a possible 40 points on Bankrate's test of asset quality, lower than 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, 0.30 percent of Compass Savings Bank'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 . How large that reserve is can be a useful 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 Compass Savings Bank'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, increasing its capital cushion, or put them to work addressing problematic loans, likely making the bank more resilient in tough times. Conversely, losses diminish a bank's ability to do those things.

On Bankrate's test of earnings, Compass Savings Bank scored 2 out of a possible 30, falling short of the national average of 15.12.

One important way to measure 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 Compass Savings Bank was 0.00 percent, below the national average of 8.10 percent.

For the twelve months ended December 31, 2017, the bank earned net income of $0 on total equity of $5.1 million. The bank reported an annualized return on average assets, or ROA, of 0.00 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.