Safe and Sound

Abbeville Building & Loan (A State-Chartered Savings Bank)

Abbeville, LA
4
Star Rating
Started in 1890, Abbeville Building & Loan (A State-Chartered Savings Bank) is an FDIC-insured bank based in Abbeville, LA. Regulatory filings show the bank having equity of $14.8 million on assets of $66.7 million, as of June 30, 2017.

Thanks to the efforts of 21 full-time employees, the bank currently holds loans and leases worth $41.1 million, $41.6 million of which are for real estate. The bank currently holds $50.3 million in deposits from U.S. customers.

Overall, Bankrate believes that, as of June 30, 2017, Abbeville Building & Loan (A State-Chartered Savings Bank) exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Keep reading for a look at how the bank did on the three major criteria Bankrate used to grade American banks.

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THE INSTITUTION'S SCORE

Capital Score

Capital is a crucial measurement of an institution's financial fortitude. It works as a cushion against losses and affords protection for depositors when a bank is experiencing economic instability. When looking at safety and soundness, the more capital, the better.
Abbeville Building & Loan (A State-Chartered Savings Bank) exceeded the national average of 13.38 points on our test to measure the adequacy of a bank's capital, scoring 24 out of a possible 30 points.

One way to measure this buffer is looking at a bank's Tier 1 capital ratio. Abbeville Building & Loan (A State-Chartered Savings Bank)'s Tier 1 capital ratio was 31.38 percent, above the 6 percent level considered adequate by regulators, and higher than the national average of 25.16 percent. The higher the capital ratio, the better the bank will be able to weather economic downturns.

Overall, Abbeville Building & Loan (A State-Chartered Savings Bank) held equity amounting to 22.20 percent of its assets, which exceeded the national average of 12.10 percent.

Asset Quality Score

This test is intended to estimate how the bank's reserves set aside to cover loan losses, as well as overall capitalization could be affected by troubled assets, such as past-due loans.

Having lots of these types of assets may eventually require a bank to use capital to cover losses, cutting down on its equity buffer. Many of those assets are also likely to be in non-accrual status and thus aren't earning interest for the bank, decreasing earnings and increasing the risk of a future failure.

Abbeville Building & Loan (A State-Chartered Savings Bank) scored 36 out of a possible 40 points on Bankrate's test of asset quality, less than the national average of 37.62.

The percentage of problem assets a bank holds compared to its total assets is a widely used indicator of asset quality.As of June 30, 2017, 3.11 percent of Abbeville Building & Loan (A State-Chartered Savings Bank)'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 1.04 percent.

Banks keep a reserve to deal with problem assets known as an "allowance for loan and lease losses." Comparing the that reserve's size to the total amount of problematic loans can be a widely used indicator when evaluating a bank's ability to manage troubled assets. Unfortunately, the FDIC did not provide information on Abbeville Building & Loan (A State-Chartered Savings Bank)'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, expanding its capital cushion, or be used to deal with problematic loans, potentially making the bank better able to withstand financial trouble. Conversely, losses lessen a bank's ability to do those things.

Abbeville Building & Loan (A State-Chartered Savings Bank) received below-average marks on Bankrate's test of earnings, achieving a score of 8 out of a possible 30.

Return on equity, calculated by dividing net income (profit, basically) by the total amount of equity, is one widely used measure of a bank's earnings. Abbeville Building & Loan (A State-Chartered Savings Bank)'s most recent annualized quarterly return on equity was 3.96 percent, below the national average of 9.28 percent.

The bank reported net income of $290,000 on total equity of $14.8 million for the twelve months ended June 30, 2017. The bank had an annualized return on average assets, or ROA, of 0.85 percent, below the 1 percent deemed satisfactory in accordance with industry standards and below the average for U.S. banks of 1.14 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.