Safe and Sound

Wallkill Valley Federal Savings and Loan Association

Wallkill, NY
2
Star Rating
Wallkill Valley Federal Savings and Loan Association is a Wallkill, NY-based, FDIC-insured bank that opened its doors in 1913. The bank has equity of $34.8 million on assets of $324.6 million, according to December 31, 2017, regulatory filings.

U.S. bank customers have $250.3 million on deposit at 8 offices in NY run by 64 full-time employees. With that footprint, the bank currently holds loans and leases worth $257.4 million, including real estate loans of $244.5 million.

Overall, Bankrate believes that, as of December 31, 2017, Wallkill Valley Federal Savings and Loan Association exhibited a below-average condition, earning 2 out of 5 stars for safety and soundness. Here's a breakdown of how the bank did on the three major criteria Bankrate used to score U.S. banks.

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THE INSTITUTION'S SCORE

Capital Score

When it comes to measuring an a bank's financial resilience, capital is crucial. It acts as a bulwark against losses and as protection for accountholders when a bank is struggling financially. When it comes to safety and soundness, the higher the capital, the better.

On our test to measure capital adequacy, Wallkill Valley Federal Savings and Loan Association received a score of 10 out of a possible 30 points, less than the national average of 13.13.

A bank's Tier 1 capital ratio is an important measure of this buffer. Wallkill Valley Federal Savings and Loan Association's Tier 1 capital ratio was 12.77 percent, exceeding the 6 percent level considered adequate by regulators, but under the national average of 25.65 percent. The higher the capital ratio, the better the bank will be able to weather economic headwinds.

Overall, Wallkill Valley Federal Savings and Loan Association held equity amounting to 10.71 percent of its assets, which was lower than the national average of 12.03 percent.

Asset Quality Score

This test's purpose is to estimate how the bank's capitalization and allocated loan loss reserves could be affected by problem assets, such as unpaid loans.

Having large numbers of these kinds of assets means a bank may eventually have to use capital to absorb losses, cutting down on its buffer of equity. It also means that there are likely to be many assets that are in non-accrual status and thus aren't earning money, diminishing earnings and increasing the chances of a failure in the future.

On Bankrate's test of asset quality, Wallkill Valley Federal Savings and Loan Association scored 28 out of a possible 40 points, lower than the national average of 37.49 points.

The percentage of problem assets a bank holds compared to its total assets is a useful indicator of asset quality.As of December 31, 2017, 2.47 percent of Wallkill Valley Federal Savings and Loan Association'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 maintain a reserve known as an "allowance for loan and lease losses" to deal with problem assets . The size of that reserve can be a useful indicator when evaluating a bank's ability to manage problem assets, especially when compared to the total amount of problem loans. Unfortunately, the FDIC did not provide information on Wallkill Valley Federal Savings and Loan Association's loan loss allowance in its most recent filings.

Earnings score

A bank's earnings performance affects its long-term survivability. Earnings may be retained by the bank, boosting its capital cushion, or be used to address problematic loans, potentially making the bank more resilient in tough times. However, banks that are losing money are less able to do those things.

Wallkill Valley Federal Savings and Loan Association scored 0 out of a possible 30 on Bankrate's test of earnings, coming in below the national average of 15.12.

One key measure of a bank's earnings is return on equity, calculated by dividing net income (essentially profit) by the total amount of equity. The most recent annualized quarterly return on equity for Wallkill Valley Federal Savings and Loan Association was -5.70 percent, below the national average of 8.10 percent.

The bank earned net income of $-1.9 million on total equity of $34.8 million for the twelve months ended December 31, 2017. The bank reported an annualized return on average assets, or ROA, of -0.78 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.