Safe and Sound

First Federal Savings & Loan Association of Ravenswood

Ravenswood, WV
4
Star Rating
First Federal Savings & Loan Association of Ravenswood is an FDIC-insured bank started in 1934 and currently based in Ravenswood, WV. Regulatory filings show the bank having equity of $1.8 million on assets of $17.6 million, as of December 31, 2017.

Thanks to the work of 4 full-time employees, the bank holds loans and leases worth $16.0 million, including $16.0 million worth of real estate loans. U.S. bank customers currently have $15.5 million in deposits with the bank.

Overall, Bankrate believes that, as of December 31, 2017, First Federal Savings & Loan Association of Ravenswood exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Keep reading for a breakdown of how the bank did on the three key criteria Bankrate used to evaluate U.S. banks.

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THE INSTITUTION'S SCORE

Capital Score

When it comes to measuring an an institution's financial strength, capital is crucial. It works as a cushion against losses and provides protection for depositors when a bank is struggling financially. When looking at safety and soundness, more capital is better.

First Federal Savings & Loan Association of Ravenswood finished below the national average of 13.13 on our test to measure the adequacy of a bank's capital, scoring 12 out of a possible 30 points.

One way to measure this buffer is looking at a bank's Tier 1 capital ratio. First Federal Savings & Loan Association of Ravenswood's Tier 1 capital ratio was 16.56 percent, higher than the 6 percent level considered adequate by regulators, but lower than the national average of 25.65 percent. The higher the capital ratio, the better the bank will be able to stand up to economic downturns.

Overall, First Federal Savings & Loan Association of Ravenswood held equity amounting to 10.43 percent of its assets, which was lower than the national average of 12.03 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 unpaid loans.

Having large numbers of these types of assets could eventually force a bank to use capital to cover losses, reducing 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 elevating the risk of a future failure.

First Federal Savings & Loan Association of Ravenswood beat out the national average of 37.49 on Bankrate's test of asset quality, racking up 40 out of a possible 40 points .

The percentage of problem assets a bank holds compared to its total assets is a helpful indicator of asset quality.As of December 31, 2017, none of First Federal Savings & Loan Association of Ravenswood'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." That reserve's size 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 Savings & Loan Association of Ravenswood's loan loss allowance in its most recent filings.

Earnings score

How profitable a bank is affects its long-term survivability. A bank can retain its earnings, giving a boost to its capital cushion, or use them to address problematic loans, likely making the bank better prepared to withstand economic trouble. Banks that are losing money, however, are less able to do those things.

First Federal Savings & Loan Association of Ravenswood fell short of the national average on Bankrate's earnings test, achieving a score of 12 out of a possible 30.

One widely used way to measure a bank's earnings is return on equity, or net income (profit, essentially) divided by the total amount of equity. The most recent annualized quarterly return on equity for First Federal Savings & Loan Association of Ravenswood was 5.58 percent, below the national average of 8.10 percent.

The bank recorded net income of $99,000 on total equity of $1.8 million for the twelve months ended December 31, 2017. The bank reported an annualized return on average assets, or ROA, of 0.56 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.