Safe and Sound

Piedmont Federal Savings Bank

Winston Salem, NC
5
Star Rating
Piedmont Federal Savings Bank is a Winston Salem, NC-based, FDIC-insured bank that opened its doors in 1903. The bank holds equity of $228.3 million on $897.8 million in assets, according to December 31, 2017, regulatory filings.

U.S. bank customers have $664.3 million on deposit at 10 offices in NC run by 122 full-time employees. With that footprint, the bank has amassed loans and leases worth $515.6 million, $516.4 million of which are for real estate.

Overall, Bankrate believes that, as of December 31, 2017, Piedmont Federal Savings Bank exhibited a superior condition, earning a full 5 stars for safety and soundness. Here's a look at how the bank did on the three important criteria Bankrate used to score American banks on safety and soundness.

WHAT IS
SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

Capital is a key measurement of a bank's financial resilience. It works as a buffer against losses and provides protection for accountholders when a bank is experiencing financial instability. From a safety and soundness perspective, the more capital, the better.

Piedmont Federal Savings Bank exceeded the national average of 13.13 points on our test to measure capital adequacy, racking up 30 out of a possible 30 points.

A bank's Tier 1 capital ratio is a widely followed measure of this buffer. Piedmont Federal Savings Bank's Tier 1 capital ratio was 65.85 percent, higher than the 6 percent level considered adequate by regulators, and exceeding the national average of 25.65 percent. A higher capital ratio means the bank will be better able to stand up to economic downturns.

Overall, Piedmont Federal Savings Bank held equity amounting to 25.43 percent of its assets, which exceeded 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 capitalization and allocated loan loss reserves.

A bank with extensive holdings of these kinds of assets could eventually be forced 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 interest for the bank, decreasing earnings and increasing the chances of a failure in the future.

On Bankrate's test of asset quality, Piedmont Federal Savings Bank scored 40 out of a possible 40 points, beating the national average of 37.49 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, 0.16 percent of Piedmont Federal Savings Bank'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 deal with troubled assets known as an "allowance for loan and lease losses." Comparing the size of that reserve to the total amount of at-risk 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 Piedmont Federal Savings Bank's loan loss allowance in its most recent filings.

Earnings score

How profitable a bank is has an effect on its long-term survivability. Earnings can be retained by the bank, increasing its capital cushion, or be used to address problematic loans, potentially making the bank more resilient in times of trouble. Conversely, losses diminish a bank's ability to do those things.

Piedmont Federal Savings Bank scored 2 out of a possible 30 on Bankrate's earnings test, less than the national average of 15.12.

One key measure of a bank's earnings is return on equity, calculated by dividing net income (profit, basically) by the total amount of equity. The most recent annualized quarterly return on equity for Piedmont Federal Savings Bank was 0.92 percent, below the national average of 8.10 percent.

The bank reported net income of $2.1 million on total equity of $228.3 million for the twelve months ended December 31, 2017. The bank experienced an annualized return on average assets, or ROA, of 0.23 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.