Safe and Sound

H. F. Gehant Banking Co.

West Brooklyn, IL
5
Star Rating
Started in 1897, H. F. Gehant Banking Co. is an FDIC-insured bank headquartered in West Brooklyn, IL. As of December 31, 2017, the bank held equity of $8.4 million on $56.3 million in assets.

Thanks to the efforts of 12 full-time employees in 2 offices in IL, the bank holds loans and leases worth $40.2 million, including $26.3 million worth of real estate loans. U.S. bank customers currently have $47.8 million in deposits with the bank.

Overall, Bankrate believes that, as of December 31, 2017, H. F. Gehant Banking Co. exhibited a superior condition, earning a full 5 stars for safety and soundness. Here's a breakdown of how the bank fared on the three key criteria Bankrate used to grade American banks on safety and soundness.

WHAT IS
SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

Capital works as a buffer against losses and provides protection for depositors during periods of economic trouble for the bank. Therefore, a bank's level of capital is an essential measurement of a bank's financial strength. From a safety and soundness perspective, the more capital, the better.

H. F. Gehant Banking Co. scored above the national average of 13.13 points on our test to measure the adequacy of a bank's capital, receiving a score of 20 out of a possible 30 points.

A bank's Tier 1 capital ratio is a commonly used measure of this buffer. H. F. Gehant Banking Co.'s Tier 1 capital ratio was 20.29 percent, above the 6 percent level regulators consider adequate, but lower than the national average of 25.65 percent. A higher capital ratio means the bank will be better able to stand up to economic difficulties.

Overall, H. F. Gehant Banking Co. held equity amounting to 14.99 percent of its assets, which exceeded the national average of 12.03 percent.

Asset Quality Score

In this test, Bankrate tries to estimate the effect of problem assets, such as unpaid loans, on the bank's reserves set aside to cover loan losses, as well as overall capitalization.

Having extensive holdings of these types of assets means a bank may have to use capital to cover losses, reducing its buffer of equity. It also means that there are likely to be many assets that are in non-accrual status and no longer earning interest for the bank, diminishing earnings and increasing the risk of a future failure.

H. F. Gehant Banking Co. beat out the national average of 37.49 on Bankrate's asset quality test, racking up 40 out of a possible 40 points .

The percentage of problem assets a bank holds compared to its total assets is a useful indicator of asset quality.As of December 31, 2017, 0.17 percent of H. F. Gehant Banking Co.'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 1.01 percent.

Banks maintain a reserve known as an "allowance for loan and lease losses" to deal with troubled assets . The size of that reserve can be a useful indicator when evaluating a bank's ability to manage troubled assets, especially when compared to the total amount of problematic loans. Unfortunately, the FDIC did not provide information on H. F. Gehant Banking Co.'s loan loss allowance in its most recent filings.

Earnings score

How profitable a bank is affects its safety and soundness. Earnings may be retained by the bank, giving a boost to its capital buffer, or be used to address problematic loans, potentially making the bank more resilient in tough times. However, banks that are losing money are less able to do those things.

H. F. Gehant Banking Co. scored 18 out of a possible 30 on Bankrate's test of earnings, exceeding the national average of 15.12.

One key measure of a bank's earnings is return on equity, calculated by dividing net income (essentially profit) by total equity. The most recent annualized quarterly return on equity for H. F. Gehant Banking Co. was 8.71 percent, above the national average of 8.10 percent.

For the twelve months ended December 31, 2017, the bank earned net income of $716,000 on total equity of $8.4 million. The bank experienced an annualized return on average assets, or ROA, of 1.27 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.