Safe and Sound

Washington Financial Bank

Washington, PA
4
Star Rating
Washington Financial Bank is an FDIC-insured bank started in 1899 and currently based in Washington, PA. As of December 31, 2017, the bank held equity of $134.3 million on assets of $1.09 billion.

U.S. bank customers have $944.8 million on deposit at 9 offices in PA run by 180 full-time employees. With that footprint, the bank currently holds loans and leases worth $795.6 million, including $696.8 million worth of real estate loans.

Overall, Bankrate believes that, as of December 31, 2017, Washington Financial Bank exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Keep reading for an analysis of how the bank fared on the three major criteria Bankrate used to evaluate U.S. banks.

WHAT IS
SAFE AND SOUND?

Find out

THE INSTITUTION'S SCORE

Capital Score

Capital acts as a bulwark against losses and provides protection for depositors when a bank is experiencing financial trouble. Therefore, a bank's level of capital is a useful measurement of an institution's financial fortitude. When looking at safety and soundness, more capital is better.

Washington Financial Bank achieved a score of 16 out of a possible 30 points on our test to measure capital adequacy, better than the national average of 13.13.

One commonly used measure of this buffer is a bank's Tier 1 capital ratio. Washington Financial Bank's Tier 1 capital ratio was 18.48 percent, above the 6 percent level regulators consider adequate, but lower than the national average of 25.65 percent. A higher capital ratio means the bank will be better able to weather financial downturns.

Overall, Washington Financial Bank held equity amounting to 12.30 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 unpaid loans, on the bank's capitalization and allocated loan loss reserves.

Having a large number of these types of assets could eventually require a bank to use capital to cover losses, cutting down on its equity buffer. It also means that there are likely to be many assets that are in non-accrual status and no longer earning money, pushing down earnings and increasing the chances of a failure in the future.

Washington Financial Bank did better than the national average of 37.49 on Bankrate's test of asset quality, racking up 40 out of a possible 40 points .

The percentage of problem assets a bank holds compared to its total assets is a handy indicator of asset quality.As of December 31, 2017, 0.37 percent of Washington Financial Bank'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 keep a reserve to deal with troubled assets known as an "allowance for loan and lease losses." That reserve's size can be a widely used indicator when evaluating a bank's ability to manage problem assets, especially when compared to the total amount of problematic loans. Unfortunately, the FDIC did not provide information on Washington Financial Bank's loan loss allowance in its most recent filings.

Earnings score

How profitable a bank is has an effect on its safety and soundness. A bank can retain its earnings, giving a boost to its capital buffer, or use them to deal with problematic loans, potentially making the bank better prepared to withstand financial trouble. Banks that are losing money, however, have less ability to do those things.

Washington Financial Bank underperformed the average on Bankrate's earnings test, achieving a score of 10 out of a possible 30.

One widely used measure of a bank's earnings is return on equity, calculated by dividing net income (profit, essentially) by total equity. Washington Financial Bank's most recent annualized quarterly return on equity was 4.77 percent, below the national average of 8.10 percent.

The bank reported net income of $6.3 million on total equity of $134.3 million for the twelve months ended December 31, 2017. The bank experienced an annualized return on average assets, or ROA, of 0.59 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.