Safe and Sound

First Federal of South Carolina, FSB

Walterboro, SC
5
Star Rating
First Federal of South Carolina, FSB is a Walterboro, SC-based, FDIC-insured bank founded in 1962. Regulatory filings show the bank having equity of $6.1 million on assets of $84.0 million, as of December 31, 2017.

With 23 full-time employees in 2 offices in SC, the bank currently holds loans and leases worth $64.3 million, including real estate loans of $63.7 million. U.S. bank customers currently have $73.0 million in deposits with the bank.

Overall, Bankrate believes that, as of December 31, 2017, First Federal of South Carolina, FSB exhibited a superior condition, earning a full 5 stars for safety and soundness. Here's a breakdown of how the bank did on the three important criteria Bankrate used to evaluate American banks on safety and soundness.

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THE INSTITUTION'S SCORE

Capital Score

Capital works as a buffer against losses and affords protection for account holders when a bank is struggling financially. Therefore, when it comes to measuring an an institution's financial resilience, capital is useful. When it comes to safety and soundness, the more capital, the better.

On our test to measure capital adequacy, First Federal of South Carolina, FSB received a score of 4 out of a possible 30 points, less than the national average of 13.13.

One widely used measure of this buffer is a bank's Tier 1 capital ratio. First Federal of South Carolina, FSB's Tier 1 capital ratio was 16.24 percent, higher than the 6 percent level considered adequate by regulators, but under the national average of 25.65 percent. A higher capital ratio means the bank will be better able to stand up to economic headwinds.

Overall, First Federal of South Carolina, FSB held equity amounting to 7.25 percent of its assets, which was lower than the national average of 12.03 percent.

Asset Quality Score

In this test, Bankrate tries to estimate the effect of troubled assets, such as unpaid loans, on the bank's loan loss reserves and overall capitalization.

Having large numbers of these types of assets means a bank could have to use capital to absorb losses, reducing its equity cushion. Many of those assets are also likely to be in non-accrual status and no longer earning money, resulting in diminished earnings and potentially more risk of a failure in the future.

First Federal of South Carolina, FSB scored 40 out of a possible 40 points on Bankrate's test of asset quality, beating the national average of 37.49.

The percentage of problem assets a bank holds compared to its total assets is a handy indicator of asset quality.As of December 31, 2017, 0.32 percent of First Federal of South Carolina, 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 keep a reserve to handle troubled assets known as an "allowance for loan and lease losses." 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 at-risk loans. Unfortunately, the FDIC did not provide information on First Federal of South Carolina, FSB's loan loss allowance in its most recent filings.

Earnings score

How profitable a bank is has an effect on its safety and soundness. A bank can retain its earnings, boosting its capital cushion, or put them to work addressing problematic loans, likely making the bank better able to withstand financial shocks. However, banks that are losing money have less ability to do those things.

First Federal of South Carolina, FSB outperformed the average on Bankrate's earnings test, achieving a score of 28 out of a possible 30.

Return on equity, calculated by dividing net income (essentially, profit) by total equity, is one important way to measure a bank's earnings. The most recent annualized quarterly return on equity for First Federal of South Carolina, FSB was 21.86 percent, above the national average of 8.10 percent.

For the twelve months ended December 31, 2017, the bank reported net income of $1.2 million on total equity of $6.1 million. The bank experienced an annualized return on average assets, or ROA, of 1.46 percent, above the 1 percent deemed satisfactory in accordance with industry standards, and above 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.