Safe and Sound

The Edon State Bank Company of Edon, Ohio

Edon, OH
5
Star Rating
Edon, OH-based The Edon State Bank Company of Edon, Ohio is an FDIC-insured bank founded in 1893. Regulatory filings show the bank having equity of $10.9 million on assets of $60.3 million, as of December 31, 2017.

Thanks to the work of 9 full-time employees in 2 offices in OH, the bank currently holds loans and leases worth $18.7 million, including $15.4 million worth of real estate loans. U.S. bank customers currently have $49.4 million in deposits with the bank.

Overall, Bankrate believes that, as of December 31, 2017, The Edon State Bank Company of Edon, Ohio exhibited a superior condition, earning a full 5 stars for safety and soundness. Here's a breakdown of how the bank did on the three important criteria Bankrate used to grade American banks on safety and soundness.

WHAT IS
SAFE AND SOUND?

Find out

THE INSTITUTION'S SCORE

Capital Score

Capital acts as a buffer against losses and provides protection for account holders during times of financial instability for the bank. It follows then that when it comes to measuring an an institution's financial strength, capital is important. When looking at safety and soundness, more capital is better.

The Edon State Bank Company of Edon, Ohio did better than the national average of 13.13 points on our test to measure the adequacy of a bank's capital, scoring 28 out of a possible 30 points.

One way to measure this buffer is looking at a bank's Tier 1 capital ratio. The Edon State Bank Company of Edon, Ohio's Tier 1 capital ratio was 44.96 percent, above the 6 percent level regulators consider adequate, and above the national average of 25.65 percent. The higher the capital ratio, the better the bank will be able to stand up to economic downturns.

Overall, The Edon State Bank Company of Edon, Ohio held equity amounting to 18.02 percent of its assets, which exceeded the national average of 12.03 percent.

Asset Quality Score

In this test, Bankrate tries to estimate the effect of troubled assets, such as past-due mortgages, on the bank's capitalization and allocated loan loss reserves.

Having a large number of these kinds of assets could eventually require a bank to use capital to absorb losses, decreasing its cushion of equity. Many of those assets are also likely to be in non-accrual status and no longer earning money, diminishing earnings and increasing the risk of a future failure.

The Edon State Bank Company of Edon, Ohio scored above the national average of 37.49 on Bankrate's asset quality test, racking up 40 out of a possible 40 points .

The percentage of problem assets a bank holds compared to its total assets is a helpful indicator of asset quality.As of December 31, 2017, none of The Edon State Bank Company of Edon, Ohio'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 maintain a reserve to deal with troubled assets known as an "allowance for loan and lease losses." Comparing the size of that reserve to the total amount of at-risk 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 The Edon State Bank Company of Edon, Ohio's loan loss allowance in its most recent filings.

Earnings score

How profitable a bank is has an effect on its long-term survivability. Earnings can be retained by the bank, expanding its capital cushion, or be used to address problematic loans, likely making the bank more resilient in times of trouble. Obviously, banks that are losing money are less able to do those things.

On Bankrate's earnings test, The Edon State Bank Company of Edon, Ohio scored 10 out of a possible 30, below the national average of 15.12.

Return on equity, calculated by dividing net income (profit, essentially) by total equity, is one widely used measure of a bank's earnings. The most recent annualized quarterly return on equity for The Edon State Bank Company of Edon, Ohio was 4.75 percent, below the national average of 8.10 percent.

For the twelve months ended December 31, 2017, the bank earned net income of $520,000 on total equity of $10.9 million. The bank had an annualized return on average assets, or ROA, of 0.86 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.