Safe and Sound

Monroe Federal Savings and Loan Association

Tipp City, OH
4
Star Rating
Started in 1875, Monroe Federal Savings and Loan Association is an FDIC-insured bank headquartered in Tipp City, OH. The bank holds equity of $11.3 million on $97.4 million in assets, according to December 31, 2017, regulatory filings.

Thanks to the work of 24 full-time employees in 3 offices in OH, the bank holds loans and leases worth $67.3 million, $62.7 million of which are for real estate. The bank currently holds $85.3 million in deposits from U.S. customers.

Overall, Bankrate believes that, as of December 31, 2017, Monroe Federal Savings and Loan Association exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Here's an analysis of how the bank did on the three key criteria Bankrate used to grade U.S. banks.

WHAT IS
SAFE AND SOUND?

Find out

THE INSTITUTION'S SCORE

Capital Score

When it comes to measuring an an institution's financial resilience, capital is useful. It acts as a cushion against losses and as protection for depositors during times of economic trouble for the bank. When it comes to safety and soundness, the more capital, the better.

On our test to measure capital adequacy, Monroe Federal Savings and Loan Association racked up 14 out of a possible 30 points, better than the national average of 13.13.

A bank's Tier 1 capital ratio is a widely used measure of this buffer. Monroe Federal Savings and Loan Association's Tier 1 capital ratio was 18.66 percent, above the 6 percent level regulators consider adequate, but less than the national average of 25.65 percent. The higher the capital ratio, the better the bank will be able to stand up to economic difficulties.

Overall, Monroe Federal Savings and Loan Association held equity amounting to 11.58 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 mortgages, on the bank's reserves set aside to cover loan losses, as well as overall capitalization.

A bank with a large number of these kinds of assets may eventually have to use capital to cover losses, reducing its buffer of equity. Many of those assets are also likely to be in non-accrual status and no longer earning interest for the bank, pushing down earnings and increasing the risk of a future failure.

On Bankrate's test of asset quality, Monroe Federal Savings and Loan Association scored 40 out of a possible 40 points, beating out 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, 0.98 percent of Monroe Federal Savings and Loan Association'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 problem 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 widely used indicator when evaluating a bank's ability to manage problem assets. Unfortunately, the FDIC did not provide information on Monroe Federal Savings and Loan Association's loan loss allowance in its most recent filings.

Earnings score

A bank's profitability has an effect on its safety and soundness. Earnings can be retained by the bank, increasing its capital buffer, or be used to address problematic loans, likely making the bank better able to withstand economic trouble. Obviously, banks that are losing money are less able to do those things.

Monroe Federal Savings and Loan Association received below-average marks on Bankrate's earnings test, achieving a score of 6 out of a possible 30.

One widely used way to measure a bank's earnings is return on equity, or net income (essentially profit) divided by total equity. The most recent annualized quarterly return on equity for Monroe Federal Savings and Loan Association was 2.04 percent, below the national average of 8.10 percent.

For the twelve months ended December 31, 2017, the bank reported net income of $227,000 on total equity of $11.3 million. The bank reported an annualized return on average assets, or ROA, of 0.24 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.