Safe and Sound

Fifth District Savings Bank

New Orleans, LA
5
Star Rating
Fifth District Savings Bank is an FDIC-insured bank started in 1926 and currently based in New Orleans, LA. As of December 31, 2017, the bank had equity of $71.6 million on $406.2 million in assets.

Thanks to the efforts of 68 full-time employees in 6 offices in LA, the bank has amassed loans and leases worth $305.2 million, including real estate loans of $306.0 million. The bank currently holds $330.7 million in deposits from U.S. customers.

Overall, Bankrate believes that, as of December 31, 2017, Fifth District Savings Bank 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 major criteria Bankrate used to grade American banks on safety and soundness.

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THE INSTITUTION'S SCORE

Capital Score

Capital is an important measurement of a bank's financial strength. It acts as a cushion against losses and provides protection for accountholders when a bank is experiencing financial instability. When it comes to safety and soundness, more capital is preferred.

Fifth District Savings Bank scored 26 out of a possible 30 points on our test to measure capital adequacy, beating the national average of 13.13.

One commonly used measure of this buffer is a bank's Tier 1 capital ratio. Fifth District Savings Bank's Tier 1 capital ratio was 36.76 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 weather financial downturns.

Overall, Fifth District Savings Bank held equity amounting to 17.62 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 troubled assets, such as unpaid mortgages, on the bank's capitalization and allocated loan loss reserves.

Having large numbers of these types of assets means a bank may have to use capital to absorb losses, reducing its buffer of equity. Many of those assets are also likely to be in non-accrual status and thus aren't earning interest for the bank, resulting in lower earnings and potentially more risk of a failure in the future.

Fifth District Savings Bank scored 40 out of a possible 40 points on Bankrate's asset quality test, beating the national average of 37.49.

A helpful indicator of asset quality is the percentage of problem assets a bank holds compared to its total assets. As of December 31, 2017, 0.33 percent of Fifth District Savings Bank's loans were noncurrent, meaning 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 size of that reserve to the total amount of problematic loans can be a helpful indicator when evaluating a bank's ability to manage troubled assets. Unfortunately, the FDIC did not provide information on Fifth District Savings Bank's loan loss allowance in its most recent filings.

Earnings score

A bank's earnings performance affects its safety and soundness. Earnings may be retained by the bank, increasing its capital buffer, or be used to address problematic loans, potentially making the bank better able to withstand financial shocks. Obviously, banks that are losing money have less ability to do those things.

On Bankrate's earnings test, Fifth District Savings Bank scored 6 out of a possible 30, below the national average of 15.12.

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. The most recent annualized quarterly return on equity for Fifth District Savings Bank was 2.70 percent, below the national average of 8.10 percent.

The bank recorded net income of $1.9 million on total equity of $71.6 million for the twelve months ended December 31, 2017. The bank reported an annualized return on average assets, or ROA, of 0.47 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.