Safe and Sound

The Federal Savings Bank

Chicago, IL
5
Star Rating
Started in 2000, The Federal Savings Bank is an FDIC-insured bank headquartered in Chicago, IL. Regulatory filings show the bank having equity of $73.4 million on assets of $363.7 million, as of December 31, 2017.

U.S. bank customers have $210.3 million on deposit at 2 offices in IL run by 897 full-time employees. With that footprint, the bank currently holds loans and leases worth $310.6 million, including real estate loans of $308.0 million.

Overall, Bankrate believes that, as of December 31, 2017, The Federal Savings Bank exhibited a superior condition, earning a full 5 stars for safety and soundness. Keep reading for an analysis of how the bank did on the three important 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 affords protection for depositors when a bank is experiencing economic trouble. From a safety and soundness perspective, the higher the capital, the better.

The Federal Savings Bank scored above the national average of 13.13 points on our test to measure the adequacy of a bank's capital, racking up 28 out of a possible 30 points.

One essential measure of this buffer is a bank's Tier 1 capital ratio. The Federal Savings Bank's Tier 1 capital ratio was 36.67 percent, higher than the 6 percent level considered adequate by regulators, and higher than the national average of 25.65 percent. A higher capital ratio means the bank will be better able to weather economic headwinds.

Overall, The Federal Savings Bank held equity amounting to 20.18 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 loan loss reserves and overall capitalization could be affected by troubled assets, such as past-due mortgages.

A bank with extensive holdings of these kinds of assets may eventually be required to use capital to absorb losses, shrinking its equity cushion. Many of those assets are also likely to be in non-accrual status and no longer earning interest for the bank, reducing earnings and increasing the risk of a future failure.

The Federal Savings Bank scored above 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 useful indicator of asset quality.As of December 31, 2017, 1.27 percent of The Federal Savings Bank's loans were noncurrent, meaning they were more than 90 days past due or were in non-accrual status. That's above the national average of 1.01 percent.

Banks maintain a reserve to handle problem assets known as an "allowance for loan and lease losses." Comparing how large that reserve is to the total amount of at-risk loans can be a widely used indicator when evaluating a bank's ability to manage problem assets. Unfortunately, the FDIC did not provide information on The 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. A bank can retain its earnings, giving a boost to its capital buffer, or put them to work addressing problematic loans, potentially making the bank better able to withstand financial trouble. Conversely, losses take away from a bank's ability to do those things.

On Bankrate's test of earnings, The Federal Savings Bank scored 22 out of a possible 30, better than the national average of 15.12.

Return on equity, calculated by dividing net income (profit, essentially) by the total amount of equity, is one important way to measure a bank's earnings. The most recent annualized quarterly return on equity for The Federal Savings Bank was 12.39 percent, above the national average of 8.10 percent.

The bank reported net income of $9.0 million on total equity of $73.4 million for the twelve months ended December 31, 2017. The bank had an annualized return on average assets, or ROA, of 2.83 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.