Safe and Sound

Olympia Federal Savings and Loan Association

Olympia, WA
5
Star Rating
Olympia, WA-based Olympia Federal Savings and Loan Association is an FDIC-insured bank founded in 1906. Regulatory filings show the bank having equity of $94.9 million on assets of $618.1 million, as of December 31, 2017.

With 110 full-time employees in 8 offices in WA, the bank holds loans and leases worth $502.1 million, including real estate loans of $501.5 million. U.S. bank customers currently have $498.0 million in deposits with the bank.

Overall, Bankrate believes that, as of December 31, 2017, Olympia Federal Savings and Loan Association 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 major criteria Bankrate used to score 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 bulwark against losses and as protection for account holders when a bank is struggling financially. It follows then that a bank's level of capital is a useful measurement of an institution's financial fortitude. When looking at safety and soundness, the more capital, the better.

Olympia Federal Savings and Loan Association scored 22 out of a possible 30 points on our test to measure the adequacy of a bank's capital, above the national average of 13.13.

One important measure of this buffer is a bank's Tier 1 capital ratio. Olympia Federal Savings and Loan Association's Tier 1 capital ratio was 24.37 percent, above the 6 percent level regulators consider adequate, 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 headwinds.

Overall, Olympia Federal Savings and Loan Association held equity amounting to 15.36 percent of its assets, which exceeded the national average of 12.03 percent.

Asset Quality Score

This test is intended to try to understand how the bank's capitalization and allocated loan loss reserves could be affected by problem assets, such as unpaid mortgages.

Having lots of these types of assets could eventually force a bank to use capital to absorb losses, reducing its cushion of equity. It also means that there are likely to be many assets that are in non-accrual status and no longer earning interest for the bank, resulting in reduced earnings and potentially more risk of a failure in the future.

Olympia Federal Savings and Loan Association did better than the national average of 37.49 on Bankrate's asset quality test, 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, 0.11 percent of Olympia Federal 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 keep a reserve to handle problem assets known as an "allowance for loan and lease losses." The size of that reserve can be a handy 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 Olympia Federal Savings and Loan Association's loan loss allowance in its most recent filings.

Earnings score

A bank's profitability affects its long-term survivability. 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 lessen a bank's ability to do those things.

On Bankrate's earnings test, Olympia Federal Savings and Loan Association scored 8 out of a possible 30, lower than the national average of 15.12.

Return on equity, calculated by dividing net income (essentially, profit) by the total amount of equity, is one important way to measure a bank's earnings. Olympia Federal Savings and Loan Association's most recent annualized quarterly return on equity was 3.36 percent, below the national average of 8.10 percent.

The bank earned net income of $3.1 million on total equity of $94.9 million for the twelve months ended December 31, 2017. The bank experienced an annualized return on average assets, or ROA, of 0.51 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.