Safe and Sound

Worthington Federal Savings Bank, FSB

Worthington, MN
5
Star Rating
Started in 1935, Worthington Federal Savings Bank, FSB is an FDIC-insured bank based in Worthington, MN. Regulatory filings show the bank having equity of $11.4 million on $74.3 million in assets, as of December 31, 2017.

With 11 full-time employees in 2 offices in MN, the bank holds loans and leases worth $48.8 million, including real estate loans of $48.2 million. U.S. bank customers currently have $62.5 million in deposits with the bank.

Overall, Bankrate believes that, as of December 31, 2017, Worthington Federal Savings Bank, FSB exhibited a superior condition, earning a full 5 stars for safety and soundness. Keep reading for a breakdown of how the bank fared on the three key criteria Bankrate used to grade 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 buffer against losses and affords protection for account holders during times of economic instability for the bank. Therefore, a bank's level of capital is an important measurement of a bank's financial fortitude. When it comes to safety and soundness, the higher the capital, the better.

Worthington Federal Savings Bank, FSB beat out the national average of 13.13 points on our test to measure the adequacy of a bank's capital, scoring 22 out of a possible 30 points.

One way to measure this buffer is looking at a bank's Tier 1 capital ratio. Worthington Federal Savings Bank, FSB's Tier 1 capital ratio was 39.03 percent, exceeding the 6 percent level considered adequate by regulators, 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 difficulties.

Overall, Worthington Federal Savings Bank, FSB held equity amounting to 15.33 percent of its assets, which exceeded the national average of 12.03 percent.

Asset Quality Score

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

Having large numbers of these kinds of assets could eventually require a bank to use capital to cover losses, decreasing 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 interest for the bank, resulting in lower earnings and potentially more risk of a future failure.

On Bankrate's test of asset quality, Worthington Federal Savings Bank, FSB scored 40 out of a possible 40 points, exceeding the national average of 37.49 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, 0.30 percent of Worthington Federal Savings Bank, FSB'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 maintain a reserve to handle problem assets known as an "allowance for loan and lease losses." Comparing the reserve's size to the total amount of at-risk loans can be a useful indicator when evaluating a bank's ability to manage troubled assets. Unfortunately, the FDIC did not provide information on Worthington Federal Savings Bank, FSB's loan loss allowance in its most recent filings.

Earnings score

How profitable a bank is has an effect on its long-term survivability. A bank can retain its earnings, boosting its capital buffer, or use them to deal with problematic loans, likely making the bank better able to withstand financial trouble. Losses, on the other hand, reduce a bank's ability to do those things.

Worthington Federal Savings Bank, FSB fell behind the national average on Bankrate's earnings test, achieving a score of 8 out of a possible 30.

Return on equity, calculated by dividing net income (profit, basically) by total equity, is one important way to measure a bank's earnings. The most recent annualized quarterly return on equity for Worthington Federal Savings Bank, FSB was 3.95 percent, below the national average of 8.10 percent.

For the twelve months ended December 31, 2017, the bank reported net income of $441,000 on total equity of $11.4 million. 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.