Safe and Sound

Home Savings Bank

Chanute, KS
5
Star Rating
Chanute, KS-based Home Savings Bank is an FDIC-insured bank started in 1886. The bank holds equity of $13.5 million on $73.9 million in assets, according to December 31, 2017, regulatory filings.

With 13 full-time employees, the bank currently holds loans and leases worth $32.7 million, including real estate loans of $27.2 million. U.S. bank customers currently have $52.6 million in deposits with the bank.

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

WHAT IS
SAFE AND SOUND?

Find out

THE INSTITUTION'S SCORE

Capital Score

Capital is an important measurement of a bank's financial fortitude. It works as a cushion against losses and affords protection for accountholders during times of economic instability for the bank. When it comes to safety and soundness, the more capital, the better.

Home Savings Bank exceeded the national average of 13.13 points on our test to measure the adequacy of a bank's capital, achieving a score of 28 out of a possible 30 points.

A bank's Tier 1 capital ratio is an essential measure of this buffer. Home Savings Bank's Tier 1 capital ratio was 34.59 percent, higher than the 6 percent level regulators consider adequate, 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 downturns.

Overall, Home Savings Bank held equity amounting to 18.31 percent of its assets, which exceeded the national average of 12.03 percent.

Asset Quality Score

This test's purpose is to estimate how the bank's loan loss reserves and overall capitalization could be affected by troubled assets, such as unpaid loans.

A bank with extensive holdings of these kinds of assets may eventually have to use capital to absorb losses, decreasing its buffer of equity. Many of those assets are also likely to be in non-accrual status and thus aren't earning money, decreasing earnings and elevating the chances of a failure in the future.

On Bankrate's asset quality test, Home Savings Bank scored 40 out of a possible 40 points, beating the national average of 37.49 points.

A handy indicator of asset quality is the percentage of problem assets a bank holds compared to its total assets. As of December 31, 2017, none of Home Savings Bank'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 to handle troubled assets known as an "allowance for loan and lease losses." Comparing the reserve's size to the total amount of problematic loans can be a useful indicator when evaluating a bank's ability to manage problem assets. Unfortunately, the FDIC did not provide information on Home Savings Bank's loan loss allowance in its most recent filings.

Earnings score

A bank's profitability has an effect on its long-term survivability. Earnings can be retained by the bank, giving a boost to its capital buffer, or be used to deal with problematic loans, potentially making the bank better able to withstand financial trouble. Losses, on the other hand, lessen a bank's ability to do those things.

Home Savings Bank did below-average on Bankrate's test of earnings, achieving a score of 2 out of a possible 30.

One important way to measure 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 Home Savings Bank was 0.00 percent, below the national average of 8.10 percent.

The bank recorded net income of $0 on total equity of $13.5 million for the twelve months ended December 31, 2017. The bank reported an annualized return on average assets, or ROA, of 0.00 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.