Safe and Sound

Eastern Savings Bank, FSB

Hunt Valley, MD
4
Star Rating
Founded in 1905, Eastern Savings Bank, FSB is an FDIC-insured bank based in Hunt Valley, MD. As of December 31, 2017, the bank had equity of $71.7 million on assets of $330.3 million.

U.S. bank customers have $224.1 million on deposit at 5 offices in MD run by 117 full-time employees. With that footprint, the bank has amassed loans and leases worth $252.0 million, including real estate loans of $254.8 million.

Overall, Bankrate believes that, as of December 31, 2017, Eastern Savings Bank, FSB 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 major criteria Bankrate used to evaluate American banks.

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THE INSTITUTION'S SCORE

Capital Score

Capital works as a bulwark against losses and provides protection for depositors during times of economic trouble for the bank. It follows then that when it comes to measuring an an institution's financial stability, capital is important. From a safety and soundness perspective, more capital is better.

On our test to measure capital adequacy, Eastern Savings Bank, FSB scored 30 out of a possible 30 points, beating out the national average of 13.13.

One way to measure this buffer is looking at a bank's Tier 1 capital ratio. Eastern Savings Bank, FSB's Tier 1 capital ratio was 30.70 percent, exceeding the 6 percent level considered adequate by regulators, and above the national average of 25.65 percent. The higher the capital ratio, the better the bank will be able to stand up to economic challenges.

Overall, Eastern Savings Bank, FSB held equity amounting to 21.70 percent of its assets, which exceeded the national average of 12.03 percent.

Asset Quality Score

This test is intended to try to understand how the bank's capitalization and allocated loan loss reserves could be affected by troubled assets, such as unpaid loans.

Having extensive holdings of these kinds of assets could eventually require a bank to use capital to absorb losses, cutting down on its buffer of equity. It also means that there are likely to be many assets that are in non-accrual status and thus aren't earning money, resulting in diminished earnings and potentially more risk of a failure in the future.

On Bankrate's test of asset quality, Eastern Savings Bank, FSB scored 16 out of a possible 40 points, falling short of the national average of 37.49 points.

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, 5.60 percent of Eastern Savings Bank, FSB's loans were noncurrent -- in other words, they were more than 90 days past due or were in non-accrual status. That's above the national average of 1.01 percent.

Banks maintain a reserve to handle problem assets known as an "allowance for loan and lease losses." That reserve's size 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 Eastern Savings Bank, FSB's loan loss allowance in its most recent filings.

Earnings score

A bank's earnings performance affects its long-term survivability. Earnings may be retained by the bank, increasing its capital buffer, or be used to deal with problematic loans, likely making the bank better prepared to withstand economic trouble. Conversely, losses take away from a bank's ability to do those things.

Eastern Savings Bank, FSB scored 20 out of a possible 30 on Bankrate's earnings test, better than the national average of 15.12.

Return on equity, calculated by dividing net income (essentially, profit) by total equity, is one important way to measure a bank's earnings. The most recent annualized quarterly return on equity for Eastern Savings Bank, FSB was 11.36 percent, above the national average of 8.10 percent.

The bank reported net income of $7.8 million on total equity of $71.7 million for the twelve months ended December 31, 2017. The bank reported an annualized return on average assets, or ROA, of 2.33 percent, above the 1 percent deemed satisfactory in accordance with industry standards, and above 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.