Safe and Sound

Dedham Institution for Savings

Dedham, MA
5
Star Rating
Founded in 1831, Dedham Institution for Savings is an FDIC-insured bank based in Dedham, MA. Regulatory filings show the bank having equity of $160.5 million on $1.44 billion in assets, as of December 31, 2017.

Thanks to the efforts of 212 full-time employees in 14 offices in MA, the bank currently holds loans and leases worth $1.07 billion, $1.05 billion of which are for real estate. The bank currently holds $1.23 billion in deposits from U.S. customers.

Overall, Bankrate believes that, as of December 31, 2017, Dedham Institution for Savings exhibited a superior condition, earning a full 5 stars for safety and soundness. Keep reading for a breakdown of how the bank did on the three key criteria Bankrate used to grade U.S. banks on safety and soundness.

WHAT IS
SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

Capital acts as a cushion against losses and as protection for depositors during times of economic instability for the bank. Therefore, when it comes to measuring an a bank's financial stability, capital is essential. When it comes to safety and soundness, the higher the capital, the better.

Dedham Institution for Savings exceeded the national average of 13.13 points on our test to measure the adequacy of a bank's capital, receiving a score of 14 out of a possible 30 points.

One important measure of this buffer is a bank's Tier 1 capital ratio. Dedham Institution for Savings's Tier 1 capital ratio was 15.83 percent, above the 6 percent level considered adequate by regulators, but less than the national average of 25.65 percent. A higher capital ratio suggests the bank will be better able to stand up to economic difficulties.

Overall, Dedham Institution for Savings held equity amounting to 11.11 percent of its assets, which was lower than the national average of 12.03 percent.

Asset Quality Score

This test is intended 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.

Having a large number of these types of assets may eventually require a bank to use capital to absorb losses, reducing its equity buffer. Many of those assets are also likely to be in non-accrual status and thus aren't earning money, diminishing earnings and elevating the risk of a future failure.

Dedham Institution for Savings 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 helpful indicator of asset quality.As of December 31, 2017, 0.40 percent of Dedham Institution for Savings'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 known as an "allowance for loan and lease losses" to deal with troubled assets . That reserve's size can be a widely used 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 Dedham Institution for Savings's loan loss allowance in its most recent filings.

Earnings score

How profitable a bank is has an effect on its long-term survivability. A bank can retain its earnings, expanding its capital buffer, or use them to address problematic loans, likely making the bank more resilient in tough times. Conversely, losses reduce a bank's ability to do those things.

On Bankrate's test of earnings, Dedham Institution for Savings scored 16 out of a possible 30, beating out the national average of 15.12.

One widely used way to measure a bank's earnings is return on equity, calculated by dividing net income (profit, basically) by total equity. Dedham Institution for Savings's most recent annualized quarterly return on equity was 8.15 percent, above the national average of 8.10 percent.

For the twelve months ended December 31, 2017, the bank recorded net income of $12.7 million on total equity of $160.5 million. The bank had an annualized return on average assets, or ROA, of 0.90 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.