Safe and Sound

First Piedmont Federal Savings and Loan Association of Gaffney

Gaffney, SC
5
Star Rating
Gaffney, SC-based First Piedmont Federal Savings and Loan Association of Gaffney is an FDIC-insured bank started in 1933. As of December 31, 2017, the bank held equity of $103.5 million on assets of $387.9 million.

U.S. bank customers have $275.2 million on deposit at 6 offices in SC run by 76 full-time employees. With that footprint, the bank currently holds loans and leases worth $286.1 million, including real estate loans of $273.4 million.

Overall, Bankrate believes that, as of December 31, 2017, First Piedmont Federal Savings and Loan Association of Gaffney exhibited a superior condition, earning a full 5 stars for safety and soundness. Here's an analysis of how the bank fared 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

Capital works as a buffer against losses and provides protection for account holders when a bank is experiencing economic trouble. It follows then that when it comes to measuring an a bank's financial strength, capital is essential. From a safety and soundness perspective, more capital is better.

First Piedmont Federal Savings and Loan Association of Gaffney did better than the national average of 13.13 points on our test to measure the adequacy of a bank's capital, receiving a score of 30 out of a possible 30 points.

One way to measure this buffer is looking at a bank's Tier 1 capital ratio. First Piedmont Federal Savings and Loan Association of Gaffney's Tier 1 capital ratio was 38.59 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 economic downturns.

Overall, First Piedmont Federal Savings and Loan Association of Gaffney held equity amounting to 26.69 percent of its assets, which exceeded the national average of 12.03 percent.

Asset Quality Score

Bankrate uses this test to estimate 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 lots of these types of assets may eventually force a bank to use capital to cover losses, shrinking its equity cushion. It also means that there are likely to be many assets that are in non-accrual status and no longer earning money, pushing down earnings and elevating the risk of a future failure.

First Piedmont Federal Savings and Loan Association of Gaffney exceeded the national average of 37.49 on Bankrate's asset quality test, racking up 40 out of a possible 40 points .

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, 0.09 percent of First Piedmont Federal Savings and Loan Association of Gaffney'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 keep a reserve known as an "allowance for loan and lease losses" to deal with problem assets . Comparing the reserve's size to the total amount of problem 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 First Piedmont Federal Savings and Loan Association of Gaffney's loan loss allowance in its most recent filings.

Earnings score

A bank's ability to earn money affects its safety and soundness. A bank can retain its earnings, increasing its capital buffer, or put them to work addressing problematic loans, potentially making the bank more resilient in tough times. Conversely, losses diminish a bank's ability to do those things.

On Bankrate's test of earnings, First Piedmont Federal Savings and Loan Association of Gaffney scored 10 out of a possible 30, falling short of the national average of 15.12.

Return on equity, calculated by dividing net income (profit, basically) by total equity, is one important way to measure a bank's earnings. The most recent annualized quarterly return on equity for First Piedmont Federal Savings and Loan Association of Gaffney was 4.30 percent, below the national average of 8.10 percent.

The bank reported net income of $4.4 million on total equity of $103.5 million for the twelve months ended December 31, 2017. The bank experienced an annualized return on average assets, or ROA, of 1.14 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.