Safe and Sound

The Home Savings and Loan Company of Kenton, Ohio

Kenton, OH
5
Star Rating
The Home Savings and Loan Company of Kenton, Ohio is an FDIC-insured bank founded in 1888 and currently headquartered in Kenton, OH. Regulatory filings show the bank having equity of $32.9 million on $118.0 million in assets, as of December 31, 2017.

With 18 full-time employees, the bank currently holds loans and leases worth $72.6 million, including real estate loans of $65.4 million. U.S. bank customers currently have $76.7 million in deposits with the bank.

Overall, Bankrate believes that, as of December 31, 2017, The Home Savings and Loan Company of Kenton, Ohio exhibited a superior condition, earning a full 5 stars for safety and soundness. Here's a look at 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 is a valuable measurement of a bank's financial resilience. It works as a cushion against losses and as protection for depositors during periods of economic trouble for the bank. From a safety and soundness perspective, the higher the capital, the better.

The Home Savings and Loan Company of Kenton, Ohio beat out the national average of 13.13 points on our test to measure capital adequacy, racking up 30 out of a possible 30 points.

One way to measure this buffer is looking at a bank's Tier 1 capital ratio. The Home Savings and Loan Company of Kenton, Ohio's Tier 1 capital ratio was 40.86 percent, exceeding the 6 percent level regulators consider adequate, 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 challenges.

Overall, The Home Savings and Loan Company of Kenton, Ohio held equity amounting to 27.89 percent of its assets, which exceeded the national average of 12.03 percent.

Asset Quality Score

This test is intended to try to understand how the bank's reserves set aside to cover loan losses, as well as overall capitalization, could be affected by troubled assets, such as unpaid loans.

A bank with large numbers of these types of assets could eventually be required to use capital to absorb losses, decreasing its equity cushion. Many of those assets are also likely to be in non-accrual status and no longer earning interest for the bank, pushing down earnings and elevating the risk of a failure in the future.

The Home Savings and Loan Company of Kenton, Ohio scored 40 out of a possible 40 points on Bankrate's test of asset quality, exceeding the national average of 37.49.

A useful indicator of asset quality is the percentage of problem assets a bank holds compared to its total assets. As of December 31, 2017, 1.20 percent of The Home Savings and Loan Company of Kenton, Ohio's loans were noncurrent -- in other words, 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 problem assets . Comparing the size of that reserve to the total amount of problematic loans can be a handy indicator when evaluating a bank's ability to manage troubled assets. Unfortunately, the FDIC did not provide information on The Home Savings and Loan Company of Kenton, Ohio's loan loss allowance in its most recent filings.

Earnings score

A bank's ability to earn money affects its safety and soundness. Earnings can be retained by the bank, increasing its capital buffer, or be used to deal with problematic loans, likely making the bank more resilient in times of trouble. However, banks that are losing money are less able to do those things.

On Bankrate's earnings test, The Home Savings and Loan Company of Kenton, Ohio scored 6 out of a possible 30, less than the national average of 15.12.

Return on equity, calculated by dividing net income (profit, essentially) by the total amount of equity, is one key measure of a bank's earnings. The most recent annualized quarterly return on equity for The Home Savings and Loan Company of Kenton, Ohio was 2.28 percent, below the national average of 8.10 percent.

For the twelve months ended December 31, 2017, the bank reported net income of $742,000 on total equity of $32.9 million. The bank reported an annualized return on average assets, or ROA, of 0.65 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.