Safe and Sound

Far East National Bank

Los Angeles, CA
4
Star Rating
Founded in 1974, Far East National Bank is an FDIC-insured bank headquartered in Los Angeles, CA. Regulatory filings show the bank having equity of $348.3 million on $1,185,059,000 in assets, as of June 30, 2017.

Thanks to the work of 138 full-time employees in 9 offices in CA, the bank currently holds loans and leases worth $830.3 million, $660.2 million of which are for real estate. U.S. bank customers currently have $799.2 million in deposits with the bank.

Overall, Bankrate believes that, as of June 30, 2017, Far East National Bank exhibited a superior condition, earning a full 5 stars for safety and soundness. Keep reading for a breakdown of how the bank did on the three major criteria Bankrate used to grade American banks on safety and soundness.

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THE INSTITUTION'S SCORE

Capital Score

Capital is a crucial measurement of a bank's financial fortitude. It works as a buffer against losses and as protection for depositors during periods of financial instability for the bank. From a safety and soundness perspective, more capital is preferred.
On our test to measure the adequacy of a bank's capital, Far East National Bank racked up 30 out of a possible 30 points, exceeding the national average of 13.38.

One widely followed measure of this buffer is a bank's Tier 1 capital ratio. Far East National Bank's Tier 1 capital ratio was 27.25 percent, exceeding the 6 percent level regulators consider adequate, and exceeding the national average of 25.16 percent. A higher capital ratio means the bank will be better able to weather economic downturns.

Overall, Far East National Bank held equity amounting to 29.39 percent of its assets, which exceeded the national average of 12.10 percent.

Asset Quality Score

Bankrate uses this test to determine the impact of problem assets, such as unpaid loans, on the bank's loan loss reserves and overall capitalization.

A bank with a large number of these kinds of assets may eventually have to use capital to absorb losses, diminishing its buffer of equity. Many of those assets are also likely to be in non-accrual status and no longer earning interest for the bank, diminishing earnings and elevating the chances of a failure in the future.

Far East National Bank scored 40 out of a possible 40 points on Bankrate's test of asset quality, above the national average of 37.62.

The percentage of problem assets a bank holds compared to its total assets is a widely used indicator of asset quality.As of June 30, 2017, none of Far East National 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 maintain a reserve known as an "allowance for loan and lease losses" to deal with troubled assets . How large that reserve is can be a widely used indicator when evaluating a bank's ability to manage troubled assets, especially when compared to the total amount of at-risk loans. Far East National Bank's loan loss allowance was 50,692.11 percent of its total noncurrent loans, higher than the national average. All else being equal, a higher ratio of loan loss allowance to noncurrent loans is better.

Earnings score

A bank's ability to earn money has an effect on its safety and soundness. Earnings can be retained by the bank, boosting its capital buffer, or be used to deal with problematic loans, potentially making the bank better prepared to withstand financial trouble. Obviously, banks that are losing money have less ability to do those things.

On Bankrate's earnings test, Far East National Bank scored 30 out of a possible 30, beating the national average of 16.52.

One important measure of a bank's earnings is return on equity, or net income (profit, essentially) divided by the total amount of equity. Far East National Bank's most recent annualized quarterly return on equity was 31.54 percent, above the national average of 9.28 percent.

The bank reported net income of $49.9 million on total equity of $348.3 million for the twelve months ended June 30, 2017. The bank reported an annualized return on average assets, or ROA, of 8.18 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.