Safe and Sound

Community Federal Savings Bank

2
Star Rating
Woodhaven, NY-based Community Federal Savings Bank is an FDIC-insured bank founded in 2001. As of December 31, 2017, the bank held equity of $14.2 million on assets of $138.7 million.

Thanks to the work of 41 full-time employees, the bank holds loans and leases worth $92.2 million, $76.2 million of which are for real estate. U.S. bank customers currently have $123.2 million in deposits with the bank.

Overall, Bankrate believes that, as of December 31, 2017, Community Federal Savings Bank exhibited a below-average condition, earning 2 out of 5 stars for safety and soundness. Here's a breakdown of how the bank fared on the three major criteria Bankrate used to evaluate American banks.

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THE INSTITUTION'S SCORE

Capital Score

Capital is a valuable measurement of an institution's financial resilience. It acts as a bulwark against losses and provides protection for depositors during periods of economic instability for the bank. When it comes to safety and soundness, the higher the capital, the better.

On our test to measure the adequacy of a bank's capital, Community Federal Savings Bank received a score of 12 out of a possible 30 points, coming in below the national average of 13.13.

One commonly used measure of this buffer is a bank's Tier 1 capital ratio. Community Federal Savings Bank's Tier 1 capital ratio was 16.30 percent, above the 6 percent level considered adequate by regulators, but less than the national average of 25.65 percent. A higher capital ratio means the bank will be better able to weather economic headwinds.

Overall, Community Federal Savings Bank held equity amounting to 10.24 percent of its assets, which was lower than the national average of 12.03 percent.

Asset Quality Score

Bankrate uses this test to estimate the effect 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 lots of these types of assets suggests a bank may have to use capital to cover losses, diminishing its equity buffer. Many of those assets are also likely to be in non-accrual status and thus aren't earning money, pushing down earnings and increasing the risk of a future failure.

On Bankrate's asset quality test, Community Federal Savings Bank scored 40 out of a possible 40 points, beating 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, none of Community Federal Savings Bank'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 handle troubled assets known as an "allowance for loan and lease losses." Comparing the reserve's size to the total amount of at-risk loans can be a useful indicator when evaluating a bank's ability to manage troubled assets. Unfortunately, the FDIC did not provide information on Community Federal Savings Bank's loan loss allowance in its most recent filings.

Earnings score

A bank's profitability affects its long-term survivability. Earnings may be retained by the bank, giving a boost to its capital buffer, or be used to deal with problematic loans, likely making the bank better prepared to withstand economic shocks. Losses, on the other hand, reduce a bank's ability to do those things.

Community Federal Savings Bank scored 0 out of a possible 30 on Bankrate's earnings test, falling short of the national average of 15.12.

One widely used way to measure a bank's earnings is return on equity, calculated by dividing net income (profit, basically) by total equity. The most recent annualized quarterly return on equity for Community Federal Savings Bank was -18.73 percent, below the national average of 8.10 percent.

The bank recorded net income of $-2.5 million on total equity of $14.2 million for the twelve months ended December 31, 2017. The bank reported an annualized return on average assets, or ROA, of -1.86 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.