Safe and Sound

Slovenian Savings and Loan Association of Canonsburg

Strabane, PA
5
Star Rating
Strabane, PA-based Slovenian Savings and Loan Association of Canonsburg is an FDIC-insured bank started in 1925. As of December 31, 2017, the bank held equity of $55.7 million on assets of $384.4 million.

With 18 full-time employees, the bank holds loans and leases worth $167.2 million, including real estate loans of $167.7 million. U.S. bank customers currently have $328.6 million in deposits with the bank.

Overall, Bankrate believes that, as of December 31, 2017, Slovenian Savings and Loan Association of Canonsburg 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 American banks on safety and soundness.

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. Therefore, when it comes to measuring an a bank's financial fortitude, capital is key. From a safety and soundness perspective, more capital is better.

Slovenian Savings and Loan Association of Canonsburg scored above the national average of 13.13 points on our test to measure the adequacy of a bank's capital, racking up 20 out of a possible 30 points.

One way to measure this buffer is looking at a bank's Tier 1 capital ratio. Slovenian Savings and Loan Association of Canonsburg's Tier 1 capital ratio was 23.84 percent, exceeding the 6 percent level regulators consider adequate, but lower than the national average of 25.65 percent. A higher capital ratio means the bank will be better able to weather financial difficulties.

Overall, Slovenian Savings and Loan Association of Canonsburg held equity amounting to 14.48 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 reserves set aside to cover loan losses, as well as overall capitalization, could be affected by problem assets, such as unpaid loans.

A bank with lots of these kinds of assets could eventually be required to use capital to cover losses, decreasing its buffer of equity. It also means that there are likely to be many assets that are in non-accrual status and thus aren't earning interest for the bank, resulting in reduced earnings and potentially more risk of a future failure.

On Bankrate's asset quality test, Slovenian Savings and Loan Association of Canonsburg scored 36 out of a possible 40 points, failing to reach 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, 2.46 percent of Slovenian Savings and Loan Association of Canonsburg's loans were noncurrent, meaning 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 to handle troubled assets known as an "allowance for loan and lease losses." Comparing the size of that reserve to the total amount of problematic loans can be a widely used indicator when evaluating a bank's ability to manage troubled assets. Unfortunately, the FDIC did not provide information on Slovenian Savings and Loan Association of Canonsburg'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, giving a boost to its capital buffer, or be used to address problematic loans, likely making the bank better able to withstand financial trouble. Obviously, banks that are losing money have less ability to do those things.

Slovenian Savings and Loan Association of Canonsburg outperformed the average on Bankrate's earnings test, achieving a score of 16 out of a possible 30.

Return on equity, calculated by dividing net income (essentially, profit) by the total amount of equity, is one important way to measure a bank's earnings. Slovenian Savings and Loan Association of Canonsburg's most recent annualized quarterly return on equity was 7.68 percent, below the national average of 8.10 percent.

For the twelve months ended December 31, 2017, the bank recorded net income of $4.1 million on total equity of $55.7 million. The bank had an annualized return on average assets, or ROA, of 1.10 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.