Safe and Sound

Home City Federal Savings Bank of Springfield

Springfield, OH
5
Star Rating
Home City Federal Savings Bank of Springfield is a Springfield, OH-based, FDIC-insured bank founded in 1925. The bank holds equity of $19.1 million on assets of $165.2 million, according to December 31, 2017, regulatory filings.

U.S. bank customers have $118.9 million on deposit at 2 offices in OH run by 26 full-time employees. With that footprint, the bank has amassed loans and leases worth $142.4 million, including real estate loans of $132.4 million.

Overall, Bankrate believes that, as of December 31, 2017, Home City Federal Savings Bank of Springfield exhibited a superior condition, earning a full 5 stars for safety and soundness. Keep reading for an analysis of how the bank did on the three key criteria Bankrate used to score American banks on safety and soundness.

WHAT IS
SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

Capital acts as a buffer against losses and provides protection for depositors during times of financial trouble for the bank. Therefore, a bank's level of capital is a key measurement of an institution's financial strength. From a safety and soundness perspective, more capital is preferred.

Home City Federal Savings Bank of Springfield scored above the national average of 13.13 points on our test to measure the adequacy of a bank's capital, achieving a score of 14 out of a possible 30 points.

A bank's Tier 1 capital ratio is a commonly used measure of this buffer. Home City Federal Savings Bank of Springfield's Tier 1 capital ratio was 17.26 percent, exceeding the 6 percent level considered adequate by regulators, but below the national average of 25.65 percent. The higher the capital ratio, the better the bank will be able to weather financial difficulties.

Overall, Home City Federal Savings Bank of Springfield held equity amounting to 11.59 percent of its assets, which was lower than the national average of 12.03 percent.

Asset Quality Score

In this test, Bankrate tries to determine 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 large numbers of these kinds of assets may eventually force a bank to use capital to cover losses, diminishing 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, decreasing earnings and increasing the chances of a failure in the future.

Home City Federal Savings Bank of Springfield exceeded the national average of 37.49 on Bankrate's test of asset quality, racking up 40 out of a possible 40 points .

A widely used indicator of asset quality is the percentage of problem assets a bank holds compared to its total assets. As of December 31, 2017, 0.21 percent of Home City Federal Savings Bank of Springfield'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 . Comparing the reserve's size to the total amount of problematic loans can be a handy indicator when evaluating a bank's ability to manage troubled assets. Unfortunately, the FDIC did not provide information on Home City Federal Savings Bank of Springfield'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, boosting its capital cushion, or put them to work addressing 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, Home City Federal Savings Bank of Springfield scored 22 out of a possible 30, beating out the national average of 15.12.

One important measure of a bank's earnings is return on equity, or net income (profit, basically) divided by total equity. The most recent annualized quarterly return on equity for Home City Federal Savings Bank of Springfield was 14.16 percent, above the national average of 8.10 percent.

The bank recorded net income of $2.5 million on total equity of $19.1 million for the twelve months ended December 31, 2017. The bank had an annualized return on average assets, or ROA, of 1.56 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.