Safe and Sound

First Independence Bank

Detroit, MI
4
Star Rating
First Independence Bank is an FDIC-insured bank founded in 1970 and currently headquartered in Detroit, MI. Regulatory filings show the bank having equity of $24.9 million on $228,066,000 in assets, as of June 30, 2017.

With 89 full-time employees in 3 offices in MI, the bank has amassed loans and leases worth $166.9 million, including real estate loans of $107.8 million. U.S. bank customers currently have $178.1 million in deposits with the bank.

Overall, Bankrate believes that, as of June 30, 2017, First Independence Bank exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Keep reading for a look at how the bank faired on the three major criteria Bankrate used to score American banks.

WHAT IS
SAFE AND SOUND?

Find out

THE INSTITUTION'S SCORE

Capital Score

Capital is an essential measurement of an institution's financial strength. It works as a buffer against losses and affords protection for accountholders when a bank is struggling financially. When looking at safety and soundness, the higher the capital, the better.
First Independence Bank fell below the national average of 13.38 on our test to measure the adequacy of a bank's capital, racking up 8 out of a possible 30 points.

A bank's Tier 1 capital ratio is a widely followed measure of this buffer. First Independence Bank's Tier 1 capital ratio was 10.37 percent, exceeding the 6 percent level regulators consider adequate, but below the national average of 25.16 percent. A higher capital ratio means the bank will be better able to stand up to economic challenges.

Overall, First Independence Bank held equity amounting to 8.14 percent of its assets, which was lower than the national average of 12.10 percent.

Asset Quality Score

In this test, Bankrate tries to determine the impact of troubled assets, such as past-due loans, on the bank's reserves set aside to cover loan losses, as well as overall capitalization.

A bank with extensive holdings of these types of assets could eventually be forced to use capital to absorb losses, shrinking its cushion of equity. It also means that there are likely to be many assets that are in non-accrual status and no longer earning money, pushing down earnings and increasing the chances of a future failure.

On Bankrate's test of asset quality, First Independence Bank scored 40 out of a possible 40 points, beating out the national average of 37.62 points.

The percentage of problem assets a bank holds compared to its total assets is a handy indicator of asset quality.As of June 30, 2017, 0.37 percent of First Independence 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 1.04 percent.

Banks keep a reserve to handle problem assets known as an "allowance for loan and lease losses." The size of that reserve can be a helpful indicator when evaluating a bank's ability to manage problem assets, especially when compared to the total amount of problem loans. Unfortunately, the FDIC did not provide information on First Independence Bank's loan loss allowance in its most recent filings.

Earnings score

How profitable a bank is has an effect on its safety and soundness. Earnings may be retained by the bank, increasing its capital buffer, or be used to deal with problematic loans, likely making the bank more resilient in tough times. Losses, on the other hand, diminish a bank's ability to do those things.

On Bankrate's test of earnings, First Independence Bank scored 12 out of a possible 30, failing to reach the national average of 16.52.

Return on equity, calculated by dividing net income (essentially, profit) by total equity, is one important way to measure a bank's earnings. The most recent annualized quarterly return on equity for First Independence Bank was 5.85 percent, below the national average of 9.28 percent.

For the twelve months ended June 30, 2017, the bank earned net income of $535,000 on total equity of $24.9 million. The bank had an annualized return on average assets, or ROA, of 0.46 percent, below the 1 percent deemed satisfactory in accordance with industry standards and below the average for U.S. banks of 1.14 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.