Safe and Sound

Yakima Federal Savings and Loan Association

Yakima, WA
5
Star Rating
Yakima, WA-based Yakima Federal Savings and Loan Association is an FDIC-insured bank started in 1905. As of December 31, 2017, the bank had equity of $422.7 million on $1.80 billion in assets.

Thanks to the work of 127 full-time employees in 10 offices in WA, the bank holds loans and leases worth $654.8 million, including real estate loans of $657.5 million. U.S. bank customers currently have $1.35 billion in deposits with the bank.

Overall, Bankrate believes that, as of December 31, 2017, Yakima 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 did on the three key criteria Bankrate used to grade American banks on safety and soundness.

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THE INSTITUTION'S SCORE

Capital Score

When it comes to measuring an an institution's financial fortitude, capital is useful. It acts as a cushion against losses and as protection for depositors when a bank is struggling financially. When looking at safety and soundness, more capital is preferred.

Yakima Federal Savings and Loan Association achieved a score of 30 out of a possible 30 points on our test to measure the adequacy of a bank's capital, exceeding the national average of 13.13.

One commonly used measure of this buffer is a bank's Tier 1 capital ratio. Yakima Federal Savings and Loan Association's Tier 1 capital ratio was 60.14 percent, exceeding the 6 percent level considered adequate by regulators, and higher 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 difficulties.

Overall, Yakima Federal Savings and Loan Association held equity amounting to 23.49 percent of its assets, which exceeded the national average of 12.03 percent.

Asset Quality Score

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

Having a large number of these types of assets suggests a bank could have to use capital to cover losses, reducing its cushion of equity. Many of those assets are also likely to be in non-accrual status and thus aren't earning money, diminishing earnings and increasing the risk of a failure in the future.

Yakima Federal Savings and Loan Association scored above the national average of 37.49 on Bankrate's test of asset quality, 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, 0.38 percent of Yakima 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 maintain a reserve known as an "allowance for loan and lease losses" to deal with problem assets . That reserve's size can be a useful 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 Yakima Federal 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. Earnings can be retained by the bank, expanding its capital cushion, or be used to deal with problematic loans, potentially making the bank better able to withstand economic trouble. Obviously, banks that are losing money are less able to do those things.

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

Return on equity, calculated by dividing net income (essentially, profit) by total equity, is one important measure of a bank's earnings. The most recent annualized quarterly return on equity for Yakima Federal Savings and Loan Association was 3.52 percent, below the national average of 8.10 percent.

For the twelve months ended December 31, 2017, the bank reported net income of $14.6 million on total equity of $422.7 million. The bank had an annualized return on average assets, or ROA, of 0.81 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.