Safe and Sound

The Farmers Bank and Savings Company

Pomeroy, OH
4
Star Rating
Started in 1904, The Farmers Bank and Savings Company is an FDIC-insured bank headquartered in Pomeroy, OH. As of December 31, 2017, the bank held equity of $31.2 million on $319.9 million in assets.

U.S. bank customers have $283.8 million on deposit at 7 offices in multiple states run by 87 full-time employees. With that footprint, the bank holds loans and leases worth $223.4 million, including real estate loans of $197.7 million.

Overall, Bankrate believes that, as of December 31, 2017, The Farmers Bank and Savings Company exhibited a good condition, earning 4 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 grade American banks.

WHAT IS
SAFE AND SOUND?

Find out

THE INSTITUTION'S SCORE

Capital Score

Capital acts as a buffer against losses and affords protection for account holders when a bank is struggling financially. Therefore, when it comes to measuring an a bank's financial strength, capital is useful. From a safety and soundness perspective, the more capital, the better.

The Farmers Bank and Savings Company received a score of 10 out of a possible 30 points on our test to measure capital adequacy, less than the national average of 13.13.

One essential measure of this buffer is a bank's Tier 1 capital ratio. The Farmers Bank and Savings Company's Tier 1 capital ratio was 16.17 percent, above the 6 percent level regulators consider adequate, but less than the national average of 25.65 percent. A higher capital ratio means the bank will be better able to weather economic challenges.

Overall, The Farmers Bank and Savings Company held equity amounting to 9.74 percent of its assets, which was lower than the national average of 12.03 percent.

Asset Quality Score

This test's purpose is to try to understand how the bank's loan loss reserves and 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 absorb losses, shrinking its buffer of equity. Many of those assets are also likely to be in non-accrual status and thus aren't earning interest for the bank, resulting in depressed earnings and potentially more risk of a failure in the future.

On Bankrate's asset quality test, The Farmers Bank and Savings Company scored 36 out of a possible 40 points, lower than 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, 0.97 percent of The Farmers Bank and Savings Company'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 maintain a reserve to handle problem assets known as an "allowance for loan and lease losses." Comparing the reserve's size 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 The Farmers Bank and Savings Company's loan loss allowance in its most recent filings.

Earnings score

A bank's ability to earn money affects its safety and soundness. A bank can retain its earnings, giving a boost to its capital cushion, or use them to deal with problematic loans, potentially making the bank better able to withstand economic trouble. Obviously, banks that are losing money have less ability to do those things.

The Farmers Bank and Savings Company beat the national 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 measure of a bank's earnings. The Farmers Bank and Savings Company's most recent annualized quarterly return on equity was 7.54 percent, below the national average of 8.10 percent.

The bank reported net income of $2.3 million on total equity of $31.2 million for the twelve months ended December 31, 2017. The bank had an annualized return on average assets, or ROA, of 0.80 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.