Safe and Sound

First State Bank of the Florida Keys

Key West, FL
5
Star Rating
Founded in 1955, First State Bank of the Florida Keys is an FDIC-insured bank headquartered in Key West, FL. The bank has equity of $79.7 million on assets of $906.0 million, according to June 30, 2017, regulatory filings.

With 179 full-time employees in 12 offices in FL, the bank currently holds loans and leases worth $617.0 million, including real estate loans of $539.0 million. U.S. bank customers currently have $660.7 million in deposits with the bank.

Overall, Bankrate believes that, as of June 30, 2017, First State Bank of the Florida Keys exhibited a superior condition, earning a full 5 stars for safety and soundness. Here's a breakdown of how the bank did on the three important 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 a bank's financial fortitude, capital is useful. It works as a bulwark against losses and as protection for depositors when a bank is experiencing economic trouble. When looking at safety and soundness, more capital is preferred.
First State Bank of the Florida Keys received a score of 8 out of a possible 30 points on our test to measure capital adequacy, falling short of the national average of 13.38.

One widely used measure of this buffer is a bank's Tier 1 capital ratio. First State Bank of the Florida Keys's Tier 1 capital ratio was 13.69 percent, exceeding the 6 percent level regulators consider adequate, but lower than the national average of 25.16 percent. A higher capital ratio suggests the bank will be better able to weather financial difficulties.

Overall, First State Bank of the Florida Keys held equity amounting to 8.79 percent of its assets, which was lower than the national average of 12.10 percent.

Asset Quality Score

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

Having a large number of these kinds of assets suggests a bank could eventually have to use capital to absorb losses, decreasing its equity buffer. 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, diminishing earnings and increasing the risk of a future failure.

First State Bank of the Florida Keys did better than the national average of 37.62 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 helpful indicator of asset quality.As of June 30, 2017, 0.19 percent of First State Bank of the Florida Keys'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 1.04 percent.

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

Earnings score

A bank's earnings performance has an effect on its long-term survivability. Earnings can be retained by the bank, boosting its capital buffer, or be used to deal with problematic loans, likely making the bank better prepared to withstand financial shocks. Losses, on the other hand, take away from a bank's ability to do those things.

First State Bank of the Florida Keys received above-average marks on Bankrate's earnings test, achieving a score of 26 out of a possible 30.

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 First State Bank of the Florida Keys was 16.83 percent, above the national average of 9.28 percent.

For the twelve months ended June 30, 2017, the bank recorded net income of $6.5 million on total equity of $79.7 million. The bank experienced an annualized return on average assets, or ROA, of 1.46 percent, above the 1 percent deemed satisfactory in accordance with industry standards, and above 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.