Safe and Sound

Westmoreland Federal Savings and Loan Association

Latrobe, PA
5
Star Rating
Founded in 1952, Westmoreland Federal Savings and Loan Association is an FDIC-insured bank headquartered in Latrobe, PA. Regulatory filings show the bank having equity of $41.8 million on $169.6 million in assets, as of December 31, 2017.

Thanks to the work of 21 full-time employees, the bank currently holds loans and leases worth $68.8 million, $69.2 million of which are for real estate. U.S. bank customers currently have $127.7 million in deposits with the bank.

Overall, Bankrate believes that, as of December 31, 2017, Westmoreland Federal Savings and Loan Association 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 key criteria Bankrate used to score American banks on safety and soundness.

WHAT IS
SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

Capital works as a bulwark against losses and as protection for account holders when a bank is experiencing economic instability. It follows then that when it comes to measuring an an institution's financial strength, capital is important. When looking at safety and soundness, the higher the capital, the better.

Westmoreland Federal Savings and Loan Association scored 30 out of a possible 30 points on our test to measure the adequacy of a bank's capital, beating the national average of 13.13.

A bank's Tier 1 capital ratio is a commonly used measure of this buffer. Westmoreland Federal Savings and Loan Association's Tier 1 capital ratio was 68.92 percent, exceeding the 6 percent level considered adequate by regulators, and above the national average of 25.65 percent. A higher capital ratio means the bank will be better able to weather financial downturns.

Overall, Westmoreland Federal Savings and Loan Association held equity amounting to 24.63 percent of its assets, which exceeded the national average of 12.03 percent.

Asset Quality Score

In this test, Bankrate tries to determine the impact of problem assets, such as past-due mortgages, on the bank's reserves set aside to cover loan losses, as well as overall capitalization.

A bank with a large number of these kinds of assets may eventually be required 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 no longer earning money, diminishing earnings and elevating the risk of a failure in the future.

Westmoreland Federal Savings and Loan Association 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 .

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, 1.26 percent of Westmoreland Federal Savings and Loan Association'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 . How large that reserve is can be a helpful indicator when evaluating a bank's ability to manage troubled assets, especially when compared to the total amount of at-risk loans. Unfortunately, the FDIC did not provide information on Westmoreland Federal Savings and Loan Association's loan loss allowance in its most recent filings.

Earnings score

A bank's earnings performance has an effect on its safety and soundness. Earnings can be retained by the bank, increasing its capital buffer, or be used to address 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.

Westmoreland Federal Savings and Loan Association scored 2 out of a possible 30 on Bankrate's test of earnings, lower than the national average of 15.12.

One important measure of a bank's earnings is return on equity, calculated by dividing net income (profit, basically) by the total amount of equity. The most recent annualized quarterly return on equity for Westmoreland Federal Savings and Loan Association was 0.94 percent, below the national average of 8.10 percent.

For the twelve months ended December 31, 2017, the bank earned net income of $393,000 on total equity of $41.8 million. The bank experienced an annualized return on average assets, or ROA, of 0.23 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.