Safe and Sound

Colonial Federal Savings Bank

Quincy, MA
4
Star Rating
Started in 1889, Colonial Federal Savings Bank is an FDIC-insured bank headquartered in Quincy, MA. The bank holds equity of $42.4 million on assets of $305.9 million, according to December 31, 2017, regulatory filings.

Thanks to the efforts of 31 full-time employees in 4 offices in MA, the bank holds loans and leases worth $177.9 million, including $178.1 million worth of real estate loans. The bank currently holds $242.5 million in deposits from U.S. customers.

Overall, Bankrate believes that, as of December 31, 2017, Colonial Federal Savings Bank exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Keep reading for a look at how the bank fared on the three major criteria Bankrate used to evaluate American banks.

WHAT IS
SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

When it comes to measuring an an institution's financial resilience, capital is useful. It works as a buffer against losses and as protection for depositors when a bank is struggling financially. From a safety and soundness perspective, the more capital, the better.

Colonial Federal Savings Bank scored 18 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.

A bank's Tier 1 capital ratio is an essential measure of this buffer. Colonial Federal Savings Bank's Tier 1 capital ratio was 27.72 percent, exceeding the 6 percent level considered adequate by regulators, and above the national average of 25.65 percent. A higher capital ratio suggests the bank will be better able to stand up to financial downturns.

Overall, Colonial Federal Savings Bank held equity amounting to 13.85 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 problem assets, such as past-due mortgages.

Having lots of these types of assets means a bank could eventually have to use capital to cover losses, diminishing its buffer of equity. It also means that there are likely to be many assets that are in non-accrual status and no longer earning money, reducing earnings and increasing the chances of a future failure.

On Bankrate's test of asset quality, Colonial Federal Savings Bank scored 40 out of a possible 40 points, beating out the national average of 37.49 points.

The percentage of problem assets a bank holds compared to its total assets is a handy indicator of asset quality.As of December 31, 2017, 0.05 percent of Colonial Federal Savings 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 1.01 percent.

Banks maintain a reserve to handle problem assets known as an "allowance for loan and lease losses." Comparing the reserve's size to the total amount of problematic loans can be a useful indicator when evaluating a bank's ability to manage problem assets. Colonial Federal Savings Bank's loan loss allowance was 1,803.70 percent of its total noncurrent loans, exceeding the national average. All things being equal, a higher ratio of loan loss allowance to noncurrent loans is better.

Earnings score

How profitable a bank is has an effect on its long-term survivability. A bank can retain its earnings, expanding its capital buffer, or put them to work addressing problematic loans, potentially making the bank better prepared to withstand economic shocks. Losses, on the other hand, reduce a bank's ability to do those things.

On Bankrate's test of earnings, Colonial Federal Savings Bank scored 10 out of a possible 30, less than the national average of 15.12.

One key measure of a bank's earnings is return on equity, or net income (essentially profit) divided by the total amount of equity. Colonial Federal Savings Bank's most recent annualized quarterly return on equity was 4.32 percent, below the national average of 8.10 percent.

For the twelve months ended December 31, 2017, the bank earned net income of $1.8 million on total equity of $42.4 million. The bank had an annualized return on average assets, or ROA, of 0.60 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.