Safe and Sound

North Easton Savings Bank

South Easton, MA
3
Star Rating
South Easton, MA-based North Easton Savings Bank is an FDIC-insured bank founded in 1864. As of December 31, 2017, the bank held equity of $43.9 million on assets of $544.6 million.

U.S. bank customers have $495.1 million on deposit at 10 offices in MA run by 83 full-time employees. With that footprint, the bank holds loans and leases worth $401.7 million, including real estate loans of $393.1 million.

Overall, Bankrate believes that, as of December 31, 2017, North Easton Savings Bank exhibited a generally satisfactory condition, earning 3 out of 5 stars for safety and soundness. Keep reading for an analysis of how the bank did on the three important criteria Bankrate used to score American banks.

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THE INSTITUTION'S SCORE

Capital Score

Capital works as a bulwark against losses and affords protection for depositors when a bank is experiencing economic trouble. It follows then that a bank's level of capital is a valuable measurement of a bank's financial resilience. When looking at safety and soundness, the higher the capital, the better.

North Easton Savings Bank came in below the national average of 13.13 on our test to measure capital adequacy, scoring 8 out of a possible 30 points.

One important measure of this buffer is a bank's Tier 1 capital ratio. North Easton Savings Bank's Tier 1 capital ratio was 14.90 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 weather economic challenges.

Overall, North Easton Savings Bank held equity amounting to 8.07 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 impact of problem assets, such as unpaid mortgages, on the bank's loan loss reserves and overall capitalization.

A bank with a large number of these kinds of assets may eventually have to use capital to cover losses, reducing its equity cushion. It also means that there are likely to be many assets that are in non-accrual status and thus aren't earning money, resulting in diminished earnings and potentially more risk of a failure in the future.

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

The percentage of problem assets a bank holds compared to its total assets is a widely used indicator of asset quality.As of December 31, 2017, 0.44 percent of North Easton 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 keep a reserve to deal with troubled assets known as an "allowance for loan and lease losses." Comparing how large that reserve is to the total amount of problem 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 North Easton Savings Bank's loan loss allowance in its most recent filings.

Earnings score

A bank's earnings performance has an effect on its safety and soundness. Earnings may be retained by the bank, giving a boost to its capital buffer, or be used to deal with problematic loans, potentially making the bank more resilient in times of trouble. Banks that are losing money, however, are less able to do those things.

North Easton Savings Bank fell short of the national average on Bankrate's test of earnings, achieving a score of 4 out of a possible 30.

One widely used way to measure a bank's earnings is return on equity, calculated by dividing net income (essentially profit) by total equity. North Easton Savings Bank's most recent annualized quarterly return on equity was 1.87 percent, below the national average of 8.10 percent.

The bank reported net income of $826,000 on total equity of $43.9 million for the twelve months ended December 31, 2017. The bank reported an annualized return on average assets, or ROA, of 0.15 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.