Safe and Sound

Spring Valley Bank

Wyoming, OH
5
Star Rating
Spring Valley Bank is a Wyoming, OH-based, FDIC-insured bank dating back to 1997. Regulatory filings show the bank having equity of $30.5 million on $70.6 million in assets, as of December 31, 2017.

With 10 full-time employees, the bank currently holds loans and leases worth $56.7 million, including real estate loans of $56.3 million. U.S. bank customers currently have $40.1 million in deposits with the bank.

Overall, Bankrate believes that, as of December 31, 2017, Spring Valley Bank exhibited a superior condition, earning a full 5 stars for safety and soundness. Keep reading for a look at how the bank fared on the three important criteria Bankrate used to score 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 provides protection for account holders during periods of financial instability for the bank. Therefore, a bank's level of capital is a useful measurement of an institution's financial strength. When looking at safety and soundness, more capital is preferred.

Spring Valley Bank scored 30 out of a possible 30 points on our test to measure the adequacy of a bank's capital, beating out the national average of 13.13.

A bank's Tier 1 capital ratio is a commonly used measure of this buffer. Spring Valley Bank's Tier 1 capital ratio was 49.04 percent, exceeding the 6 percent level considered adequate by regulators, and exceeding the national average of 25.65 percent. The higher the capital ratio, the better the bank will be able to stand up to economic headwinds.

Overall, Spring Valley Bank held equity amounting to 43.17 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 loan loss reserves and overall capitalization could be affected by troubled assets, such as unpaid loans.

A bank with a large number of these kinds of assets could eventually be required to use capital to cover 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, reducing earnings and elevating the risk of a future failure.

On Bankrate's test of asset quality, Spring Valley Bank scored 40 out of a possible 40 points, better than the national average of 37.49 points.

A widely used indicator of asset quality is the percentage of problem assets a bank holds compared to its total assets. As of December 31, 2017, 2.90 percent of Spring Valley Bank'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 known as an "allowance for loan and lease losses" to deal with troubled assets . Comparing how large that reserve is to the total amount of problem loans can be a useful indicator when evaluating a bank's ability to manage problem assets. Unfortunately, the FDIC did not provide information on Spring Valley Bank's loan loss allowance in its most recent filings.

Earnings score

How profitable a bank is affects its safety and soundness. A bank can retain its earnings, expanding its capital cushion, or put them to work addressing problematic loans, potentially making the bank better able to withstand financial trouble. Conversely, losses diminish a bank's ability to do those things.

Spring Valley Bank beat the national average on Bankrate's earnings test, achieving a score of 18 out of a possible 30.

One important way to measure a bank's earnings is return on equity, or net income (profit, basically) divided by the total amount of equity. Spring Valley Bank's most recent annualized quarterly return on equity was 9.34 percent, above the national average of 8.10 percent.

The bank recorded net income of $2.8 million on total equity of $30.5 million for the twelve months ended December 31, 2017. The bank had an annualized return on average assets, or ROA, of 4.02 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.