Safe and Sound

Versailles Savings and Loan Company

Versailles, OH
5
Star Rating
Versailles Savings and Loan Company is a Versailles, OH-based, FDIC-insured bank founded in 1887. The bank has equity of $10.5 million on assets of $56.0 million, according to December 31, 2017, regulatory filings.

Thanks to the efforts of 9 full-time employees, the bank has amassed loans and leases worth $42.6 million, including $40.4 million worth of real estate loans. The bank currently holds $41.4 million in deposits from U.S. customers.

Overall, Bankrate believes that, as of December 31, 2017, Versailles Savings and Loan Company 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 major criteria Bankrate used to grade American banks on safety and soundness.

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THE INSTITUTION'S SCORE

Capital Score

Capital acts as a cushion against losses and as protection for account holders during periods of financial instability for the bank. Therefore, when it comes to measuring an a bank's financial strength, capital is useful. From a safety and soundness perspective, more capital is better.

Versailles Savings and Loan Company scored above the national average of 13.13 points on our test to measure capital adequacy, scoring 28 out of a possible 30 points.

One essential measure of this buffer is a bank's Tier 1 capital ratio. Versailles Savings and Loan Company's Tier 1 capital ratio was 32.25 percent, higher than the 6 percent level regulators consider adequate, and higher than the national average of 25.65 percent. The higher the capital ratio, the better the bank will be able to stand up to financial headwinds.

Overall, Versailles Savings and Loan Company held equity amounting to 18.74 percent of its assets, which exceeded the national average of 12.03 percent.

Asset Quality Score

In this test, Bankrate tries to estimate the impact of problem assets, such as unpaid loans, on the bank's capitalization and allocated loan loss reserves.

A bank with a large number of these kinds of assets may eventually be forced to use capital to cover losses, cutting down on its buffer of equity. Many of those assets are also likely to be in non-accrual status and thus aren't earning money, resulting in depressed earnings and potentially more risk of a future failure.

Versailles Savings and Loan Company 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, none of Versailles Savings and Loan 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 troubled assets known as an "allowance for loan and lease losses." Comparing how large that reserve is to the total amount of problematic loans can be a handy indicator when evaluating a bank's ability to manage problem assets. Unfortunately, the FDIC did not provide information on Versailles Savings and Loan Company's loan loss allowance in its most recent filings.

Earnings score

A bank's earnings performance affects its safety and soundness. A bank can retain its earnings, giving a boost to its capital buffer, or put them to work addressing problematic loans, potentially making the bank more resilient in times of trouble. Obviously, banks that are losing money are less able to do those things.

Versailles Savings and Loan Company underperformed the average on Bankrate's earnings test, achieving a score of 6 out of a possible 30.

One key way to measure a bank's earnings is return on equity, calculated by dividing net income (essentially profit) by total equity. Versailles Savings and Loan Company's most recent annualized quarterly return on equity was 2.09 percent, below the national average of 8.10 percent.

For the twelve months ended December 31, 2017, the bank recorded net income of $217,000 on total equity of $10.5 million. The bank had an annualized return on average assets, or ROA, of 0.39 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.