Safe and Sound

Pioneer Federal Savings and Loan Association

Deer Lodge, MT
5
Star Rating
Pioneer Federal Savings and Loan Association is an FDIC-insured bank founded in 1912 and currently headquartered in Deer Lodge, MT. As of December 31, 2017, the bank had equity of $16.2 million on $96.4 million in assets.

Thanks to the work of 20 full-time employees in 2 offices in MT, the bank holds loans and leases worth $60.5 million, $56.1 million of which are for real estate. U.S. bank customers currently have $79.6 million in deposits with the bank.

Overall, Bankrate believes that, as of December 31, 2017, Pioneer Federal Savings and Loan Association exhibited a superior condition, earning a full 5 stars for safety and soundness. Keep reading for an analysis of how the bank fared on the three key 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 buffer against losses and as protection for account holders during periods of economic trouble for the bank. Therefore, when it comes to measuring an a bank's financial resilience, capital is useful. From a safety and soundness perspective, the higher the capital, the better.

Pioneer Federal Savings and Loan Association scored 24 out of a possible 30 points on our test to measure capital adequacy, above the national average of 13.13.

One important measure of this buffer is a bank's Tier 1 capital ratio. Pioneer Federal Savings and Loan Association's Tier 1 capital ratio was 35.03 percent, exceeding the 6 percent level regulators consider adequate, and exceeding the national average of 25.65 percent. The higher the capital ratio, the better the bank will be able to stand up to financial headwinds.

Overall, Pioneer Federal Savings and Loan Association held equity amounting to 16.80 percent of its assets, which exceeded the national average of 12.03 percent.

Asset Quality Score

This test is intended to estimate how the bank's capitalization and allocated loan loss reserves could be affected by problem assets, such as past-due mortgages.

Having large numbers of these kinds of assets suggests a bank may have to use capital to absorb losses, reducing its buffer of equity. It also means that there are likely to be many assets that are in non-accrual status and thus aren't earning money, resulting in diminished earnings and potentially more risk of a future failure.

Pioneer 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 widely used indicator of asset quality.As of December 31, 2017, 0.30 percent of Pioneer Federal Savings and Loan Association'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 troubled assets . 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 Pioneer Federal Savings and Loan Association's loan loss allowance in its most recent filings.

Earnings score

A bank's ability to earn money has an effect on its long-term survivability. Earnings may be retained by the bank, boosting its capital cushion, or be used to deal with problematic loans, likely making the bank more resilient in times of trouble. However, banks that are losing money have less ability to do those things.

Pioneer Federal Savings and Loan Association underperformed the average on Bankrate's test of earnings, achieving a score of 6 out of a possible 30.

Return on equity, calculated by dividing net income (profit, essentially) by total equity, is one important way to measure a bank's earnings. Pioneer Federal Savings and Loan Association's most recent annualized quarterly return on equity was 2.31 percent, below the national average of 8.10 percent.

The bank reported net income of $371,000 on total equity of $16.2 million for the twelve months ended December 31, 2017. The bank had an annualized return on average assets, or ROA, of 0.38 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.