Safe and Sound

Hatboro Federal Savings, FA

Hatboro, PA
5
Star Rating
Founded in 1941, Hatboro Federal Savings, FA is an FDIC-insured bank based in Hatboro, PA. The bank has equity of $108.9 million on assets of $494.9 million, according to December 31, 2017, regulatory filings.

Thanks to the work of 44 full-time employees in 4 offices in PA, the bank holds loans and leases worth $331.4 million, $333.5 million of which are for real estate. The bank currently holds $380.6 million in deposits from U.S. customers.

Overall, Bankrate believes that, as of December 31, 2017, Hatboro Federal Savings, FA exhibited a superior condition, earning a full 5 stars for safety and soundness. Keep reading for a look at how the bank did on the three important criteria Bankrate used to evaluate American banks on safety and soundness.

WHAT IS
SAFE AND SOUND?

Find out

THE INSTITUTION'S SCORE

Capital Score

Capital works as a buffer against losses and as protection for depositors during times of financial instability for the bank. It follows then that a bank's level of capital is an important measurement of an institution's financial strength. When it comes to safety and soundness, more capital is preferred.

On our test to measure the adequacy of a bank's capital, Hatboro Federal Savings, FA racked up 30 out of a possible 30 points, exceeding the national average of 13.13.

One widely followed measure of this buffer is a bank's Tier 1 capital ratio. Hatboro Federal Savings, FA's Tier 1 capital ratio was 42.07 percent, exceeding the 6 percent level considered adequate by regulators, and exceeding the national average of 25.65 percent. A higher capital ratio suggests the bank will be better able to weather financial difficulties.

Overall, Hatboro Federal Savings, FA held equity amounting to 22.01 percent of its assets, which exceeded the national average of 12.03 percent.

Asset Quality Score

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

Having a large number of these kinds of assets means a bank could have to use capital to cover losses, shrinking 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 money, resulting in diminished earnings and potentially more risk of a future failure.

On Bankrate's asset quality test, Hatboro Federal Savings, FA scored 36 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 handy indicator of asset quality.As of December 31, 2017, 3.04 percent of Hatboro Federal Savings, FA'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 keep a reserve known as an "allowance for loan and lease losses" to deal with problem assets . Comparing the size of that reserve to the total amount of at-risk loans can be a helpful indicator when evaluating a bank's ability to manage problem assets. Unfortunately, the FDIC did not provide information on Hatboro Federal Savings, FA's loan loss allowance in its most recent filings.

Earnings score

How profitable a bank is has an effect on its safety and soundness. Earnings can be retained by the bank, giving a boost to its capital cushion, or be used to address problematic loans, potentially making the bank more resilient in times of trouble. Obviously, banks that are losing money have less ability to do those things.

Hatboro Federal Savings, FA did below-average on Bankrate's earnings test, achieving a score of 6 out of a possible 30.

Return on equity, calculated by dividing net income (profit, basically) by total equity, is one widely used measure of a bank's earnings. The most recent annualized quarterly return on equity for Hatboro Federal Savings, FA was 2.22 percent, below the national average of 8.10 percent.

The bank reported net income of $2.4 million on total equity of $108.9 million for the twelve months ended December 31, 2017. The bank had an annualized return on average assets, or ROA, of 0.48 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.