Safe and Sound

Spratt Savings and Loan Association

Chester, SC
5
Star Rating
Spratt Savings and Loan Association is an FDIC-insured bank started in 1893 and currently based in Chester, SC. Regulatory filings show the bank having equity of $28.0 million on $113.5 million in assets, as of December 31, 2017.

U.S. bank customers have $85.3 million on deposit at 2 offices in SC run by 18 full-time employees. With that footprint, the bank has amassed loans and leases worth $30.9 million, including $28.6 million worth of real estate loans.

Overall, Bankrate believes that, as of December 31, 2017, Spratt Savings and Loan Association exhibited a superior condition, earning a full 5 stars for safety and soundness. Keep reading for a look at how the bank did on the three key criteria Bankrate used to evaluate American banks on safety and soundness.

WHAT IS
SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

Capital is an important measurement of an institution's financial fortitude. It acts as a cushion against losses and as protection for depositors when a bank is experiencing economic instability. When it comes to safety and soundness, more capital is preferred.

On our test to measure capital adequacy, Spratt Savings and Loan Association scored 30 out of a possible 30 points, better than the national average of 13.13.

A bank's Tier 1 capital ratio is a widely followed measure of this buffer. Spratt Savings and Loan Association's Tier 1 capital ratio was 74.45 percent, exceeding the 6 percent level regulators consider adequate, and higher than the national average of 25.65 percent. The higher the capital ratio, the better the bank will be able to weather financial challenges.

Overall, Spratt Savings and Loan Association held equity amounting to 24.67 percent of its assets, which exceeded the national average of 12.03 percent.

Asset Quality Score

This test's purpose is to try to understand how the bank's reserves set aside to cover loan losses, as well as overall capitalization, could be affected by problem assets, such as past-due mortgages.

Having a large number of these types of assets means a bank could have to use capital to cover losses, decreasing its equity cushion. 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.

On Bankrate's test of asset quality, Spratt Savings and Loan Association scored 40 out of a possible 40 points, above the national average of 37.49 points.

The percentage of problem assets a bank holds compared to its total assets is a handy indicator of asset quality.As of December 31, 2017, 0.74 percent of Spratt 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 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 useful indicator when evaluating a bank's ability to manage problem assets. Unfortunately, the FDIC did not provide information on Spratt Savings and Loan Association's loan loss allowance in its most recent filings.

Earnings score

How profitable a bank is affects its safety and soundness. A bank can retain its earnings, boosting its capital cushion, or put them to work addressing problematic loans, potentially making the bank better able to withstand financial shocks. However, banks that are losing money have less ability to do those things.

Spratt Savings and Loan Association scored 2 out of a possible 30 on Bankrate's test of earnings, lower than the national average of 15.12.

Return on equity, calculated by dividing net income (profit, basically) by the total amount of equity, is one widely used measure of a bank's earnings. The most recent annualized quarterly return on equity for Spratt Savings and Loan Association was 0.91 percent, below the national average of 8.10 percent.

For the twelve months ended December 31, 2017, the bank reported net income of $253,000 on total equity of $28.0 million. The bank reported an annualized return on average assets, or ROA, of 0.22 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.