Home Savings Bank named among safest in country, state

A Wapakoneta bank was recently named among the 359 safest in the United States.

Home Savings Bank, located at 1 S. Blackhoof St., not only was listed among the top safest banks in America by an article published in MSN’s money section in July, but the community bank also made the list among only six other Ohio banks.

“It doesn’t surprise me,” Home Savings President Jim West told the Wapakoneta Daily News. “We’re very proud of being named one of the safest banks, it’s a real honor.

 “We know the strength of our loans,” the bank president said. “Historically, we have strong loans, strong capital, own no property through foreclosures, and maintain a loan loss reserve but have never been into it. We have always had our deposit customers’ interests at heart when we are making loan decisions.”

He said while many components of banking are monitored by outside agencies, he never knew a list like this existed.

West said what makes the bank stand out among others is its ownership by customers and the community, something he’s not sure if all Wapakoneta area residents understand.

A conventional mortgage lender, West said it is a credit to Home Savings customers, the community, and the work ethic of folks in Auglaize  County.

“As a business owned by the community, we try to give back to the community,” West said.

In business under the name Home Savings since 1941 in Wapakoneta, West said they remain committed to staying home-owned.

“This is the company,” West said. “All decisions are made right here. There are no shareholders or stockholders. Our customers own the bank so to speak.”

The bank president said their familiar advertising slogan rings true. Customers really are “safe at home.”

Other banks in Ohio named among the safest in the country using the Texas Ratio were located in Baltic, Deshler, Brook Park, Centerburg, Marblehead and Nelsonville.

The Texas Ratio, developed by a banking analyst during the state’s recession in the 1980s was used then to accurately predict bank failures and again during a recession in New England in the 1990s. The ratio is still widely used throughout the banking industry.

While the ratio was developed to predict bank failures, the ratio also can be used to find the banks that are furthest from failure. The closer the bank scores to zero, the lower its risk of failure and of the 7,300 banks in America, Home Savings was one of 359 that scored 0.0 on that ratio.

The Texas Ratio is determined by dividing the bank’s non-performing assets (non-performing loans and the real estate now owned by the bank because it foreclosed on property) by its tangible common equity and loan loss reserves.

Tangible common equity is equity capital minus goodwill and intangibles. As the ratio approaches 1, the bank’s risk of failure increases. Relatively speaking, the higher the ratio, the more precarious the bank’s financial situation.

The ratio takes into account two important factors in a bank’s health — the number of bad loans a bank has made and the cushion the bank’s owners have provided to cover those bad loans. If too many of the bank’s loans are non-performing (as described by the Texas Ratio’s numerator) the bad loans will erode the bank’s equity cushion, which could cause the bank to fail.

Likewise, if there is not enough equity in a bank (as described by the Texas Ratio’s denominator) the bank will not be able to absorb very many bad loans and the bank will fail.

According to the article, “The 359 Safest Banks in America,” that was published on MSN Money, the Federal Deposit Insurance Fund (DIF), which insures bank deposits up to $250,000 has been nearly drained and now is when consumers need to start thinking about doing business with banks that deserve their trust, that will keep every dollar deposited safe until they come back for it.

In 2007, the DIF had $52.4 billion, but since 2008, 413 banks have failed and that has taken a devastating toll on the once-solid reserve fund, leaving it with a balance of just $11.8 billion — a decrease of approximately 78 percent.