Safe and Sound

Milton Savings Bank

Milton, PA
5
Star Rating
Milton Savings Bank is a Milton, PA-based, FDIC-insured bank founded in 1920. As of December 31, 2017, the bank held equity of $14.7 million on $66.9 million in assets.

Thanks to the efforts of 11 full-time employees, the bank currently holds loans and leases worth $40.5 million, $40.5 million of which are for real estate. The bank currently holds $52.0 million in deposits from U.S. customers.

Overall, Bankrate believes that, as of December 31, 2017, Milton Savings Bank 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 grade U.S. banks on safety and soundness.

WHAT IS
SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

Capital works as a cushion against losses and provides protection for account holders when a bank is struggling financially. It follows then that a bank's level of capital is a useful measurement of a bank's financial resilience. From a safety and soundness perspective, the higher the capital, the better.

Milton Savings Bank scored above the national average of 13.13 points on our test to measure capital adequacy, receiving a score of 30 out of a possible 30 points.

A bank's Tier 1 capital ratio is a widely used measure of this buffer. Milton Savings Bank's Tier 1 capital ratio was 59.84 percent, exceeding the 6 percent level considered adequate by regulators, and higher than the national average of 25.65 percent. A higher capital ratio means the bank will be better able to weather financial challenges.

Overall, Milton Savings Bank held equity amounting to 22.04 percent of its assets, which exceeded the national average of 12.03 percent.

Asset Quality Score

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

Having large numbers of these types of assets could eventually require a bank to use capital to absorb losses, cutting down on its cushion 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 depressed earnings and potentially more risk of a future failure.

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

A helpful indicator of asset quality is the percentage of problem assets a bank holds compared to its total assets. As of December 31, 2017, 0.92 percent of Milton Savings Bank'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 keep a reserve to deal with troubled assets known as an "allowance for loan and lease losses." How large that reserve is can be a helpful indicator when evaluating a bank's ability to manage troubled assets, especially when compared to the total amount of problem loans. Unfortunately, the FDIC did not provide information on Milton Savings Bank's loan loss allowance in its most recent filings.

Earnings score

A bank's profitability affects its safety and soundness. A bank can retain its earnings, boosting its capital buffer, or use them to deal with problematic loans, likely making the bank better able to withstand economic trouble. Banks that are losing money, however, are less able to do those things.

Milton Savings Bank underperformed the average on Bankrate's test of earnings, achieving a score of 8 out of a possible 30.

One important way to measure a bank's earnings is return on equity, or net income (essentially profit) divided by the total amount of equity. Milton Savings Bank's most recent annualized quarterly return on equity was 3.33 percent, below the national average of 8.10 percent.

For the twelve months ended December 31, 2017, the bank reported net income of $483,000 on total equity of $14.7 million. The bank experienced an annualized return on average assets, or ROA, of 0.72 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.