Safe and Sound

Fairview Savings and Loan Association

Fairview, OK
5
Star Rating
Fairview, OK-based Fairview Savings and Loan Association is an FDIC-insured bank started in 1901. The bank holds equity of $7.9 million on $45.6 million in assets, according to December 31, 2017, regulatory filings.

Thanks to the efforts of 8 full-time employees, the bank currently holds loans and leases worth $33.7 million, including $30.7 million worth of real estate loans. The bank currently holds $37.5 million in deposits from U.S. customers.

Overall, Bankrate believes that, as of December 31, 2017, Fairview Savings and Loan Association exhibited a superior condition, earning a full 5 stars for safety and soundness. Keep reading for a look at how the bank did on the three important criteria Bankrate used to grade U.S. banks on safety and soundness.

WHAT IS
SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

When it comes to measuring an a bank's financial resilience, capital is crucial. It acts as a cushion against losses and as protection for accountholders during times of financial trouble for the bank. When looking at safety and soundness, more capital is preferred.

On our test to measure the adequacy of a bank's capital, Fairview Savings and Loan Association achieved a score of 26 out of a possible 30 points, exceeding the national average of 13.13.

One essential measure of this buffer is a bank's Tier 1 capital ratio. Fairview Savings and Loan Association's Tier 1 capital ratio was 27.71 percent, higher than the 6 percent level regulators consider adequate, and exceeding the national average of 25.65 percent. The higher the capital ratio, the better the bank will be able to weather economic headwinds.

Overall, Fairview Savings and Loan Association held equity amounting to 17.38 percent of its assets, which exceeded the national average of 12.03 percent.

Asset Quality Score

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

Having a large number of these types of assets suggests a bank could eventually have to use capital to cover losses, diminishing 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 money, reducing earnings and elevating the chances of a future failure.

Fairview Savings and Loan Association scored 40 out of a possible 40 points on Bankrate's asset quality test, above the national average of 37.49.

A handy indicator of asset quality is the percentage of problem assets a bank holds compared to its total assets. As of December 31, 2017, none of Fairview 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 below the national average of 1.01 percent.

Banks maintain a reserve known as an "allowance for loan and lease losses" to deal with troubled assets . The size of that reserve 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 Fairview 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 long-term survivability. Earnings may be retained by the bank, giving a boost to its capital buffer, or be used to deal with problematic loans, likely making the bank more resilient in tough times. Obviously, banks that are losing money are less able to do those things.

Fairview Savings and Loan Association did below-average on Bankrate's earnings test, achieving a score of 12 out of a possible 30.

Return on equity, calculated by dividing net income (profit, essentially) by the total amount of equity, is one important way to measure a bank's earnings. Fairview Savings and Loan Association's most recent annualized quarterly return on equity was 5.35 percent, below the national average of 8.10 percent.

For the twelve months ended December 31, 2017, the bank recorded net income of $416,000 on total equity of $7.9 million. The bank reported an annualized return on average assets, or ROA, of 0.95 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.