Safe and Sound

Central Federal Savings and Loan Association of Rolla

Rolla, MO
5
Star Rating
Founded in 1952, Central Federal Savings and Loan Association of Rolla is an FDIC-insured bank based in Rolla, MO. The bank has equity of $20.5 million on assets of $67.9 million, according to December 31, 2017, regulatory filings.

Thanks to the efforts of 15 full-time employees, the bank has amassed loans and leases worth $51.9 million, $50.1 million of which are for real estate. The bank currently holds $46.0 million in deposits from U.S. customers.

Overall, Bankrate believes that, as of December 31, 2017, Central Federal Savings and Loan Association of Rolla 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 U.S. banks on safety and soundness.

WHAT IS
SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

Capital works as a buffer against losses and affords protection for account holders during times of financial instability for the bank. It follows then that a bank's level of capital is a valuable measurement of a bank's financial strength. From a safety and soundness perspective, the higher the capital, the better.

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

One commonly used measure of this buffer is a bank's Tier 1 capital ratio. Central Federal Savings and Loan Association of Rolla's Tier 1 capital ratio was 51.07 percent, above the 6 percent level regulators consider adequate, and above the national average of 25.65 percent. The higher the capital ratio, the better the bank will be able to weather economic difficulties.

Overall, Central Federal Savings and Loan Association of Rolla held equity amounting to 30.16 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 loan loss reserves and overall capitalization could be affected by troubled assets, such as unpaid loans.

A bank with a large number of these types of assets may eventually be required to use capital to cover losses, diminishing its equity cushion. Many of those assets are also likely to be in non-accrual status and no longer earning interest for the bank, resulting in lower earnings and potentially more risk of a failure in the future.

On Bankrate's test of asset quality, Central Federal Savings and Loan Association of Rolla 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 useful indicator of asset quality.As of December 31, 2017, 0.19 percent of Central Federal Savings and Loan Association of Rolla'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 to deal with problem assets known as an "allowance for loan and lease losses." That reserve's size can be a useful indicator when evaluating a bank's ability to manage troubled assets, especially when compared to the total amount of problem loans. Unfortunately, the FDIC did not provide information on Central Federal Savings and Loan Association of Rolla'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 cushion, or use them to address problematic loans, potentially 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.

Central Federal Savings and Loan Association of Rolla received below-average marks on Bankrate's test of earnings, achieving a score of 2 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. Central Federal Savings and Loan Association of Rolla's most recent annualized quarterly return on equity was 0.62 percent, below the national average of 8.10 percent.

The bank earned net income of $127,000 on total equity of $20.5 million for the twelve months ended December 31, 2017. The bank experienced an annualized return on average assets, or ROA, of 0.18 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.