Safe and Sound

Liberty Savings Bank, F.S.B.

Wilmington, OH
4
Star Rating
Wilmington, OH-based Liberty Savings Bank, F.S.B. is an FDIC-insured bank started in 1984. The bank holds equity of $62.3 million on $637.5 million in assets, according to December 31, 2017, regulatory filings.

U.S. bank customers have $384.7 million on deposit at 8 offices in multiple states run by 125 full-time employees. With that footprint, the bank has amassed loans and leases worth $523.5 million, including $528.0 million worth of real estate loans.

Overall, Bankrate believes that, as of December 31, 2017, Liberty Savings Bank, F.S.B. exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Keep reading for a breakdown of how the bank fared on the three important criteria Bankrate used to score U.S. banks.

WHAT IS
SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

Capital acts as a cushion against losses and as protection for account holders when a bank is struggling financially. It follows then that a bank's level of capital is an essential measurement of a bank's financial resilience. When it comes to safety and soundness, more capital is better.

On our test to measure capital adequacy, Liberty Savings Bank, F.S.B. received a score of 8 out of a possible 30 points, less than the national average of 13.13.

One important measure of this buffer is a bank's Tier 1 capital ratio. Liberty Savings Bank, F.S.B.'s Tier 1 capital ratio was 18.19 percent, exceeding the 6 percent level considered adequate by regulators, but lower than the national average of 25.65 percent. A higher capital ratio suggests the bank will be better able to stand up to financial challenges.

Overall, Liberty Savings Bank, F.S.B. held equity amounting to 9.78 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 past-due loans, on the bank's capitalization and allocated loan loss reserves.

Having lots of these kinds of assets may eventually force a bank to use capital to absorb losses, shrinking its equity cushion. 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, resulting in depressed earnings and potentially more risk of a future failure.

Liberty Savings Bank, F.S.B. scored 36 out of a possible 40 points on Bankrate's asset quality test, failing to reach the national average of 37.49.

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, 1.50 percent of Liberty Savings Bank, F.S.B.'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 problematic loans can be a handy indicator when evaluating a bank's ability to manage problem assets. Unfortunately, the FDIC did not provide information on Liberty Savings Bank, F.S.B.'s loan loss allowance in its most recent filings.

Earnings score

A bank's ability to earn money has an effect on its long-term survivability. Earnings may be retained by the bank, expanding its capital buffer, or be used to address problematic loans, likely making the bank better able to withstand economic shocks. Conversely, losses diminish a bank's ability to do those things.

Liberty Savings Bank, F.S.B. outperformed the average on Bankrate's test of earnings, achieving a score of 22 out of a possible 30.

One important measure of a bank's earnings is return on equity, calculated by dividing net income (profit, essentially) by the total amount of equity. Liberty Savings Bank, F.S.B.'s most recent annualized quarterly return on equity was 12.17 percent, above the national average of 8.10 percent.

The bank recorded net income of $7.5 million on total equity of $62.3 million for the twelve months ended December 31, 2017. The bank had an annualized return on average assets, or ROA, of 1.16 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.