Safe and Sound

First Bank of the Palm Beaches

West Palm Beach, FL
3
Star Rating
First Bank of the Palm Beaches is an FDIC-insured bank started in 2006 and currently based in West Palm Beach, FL. As of December 31, 2017, the bank held equity of $14.6 million on $140.7 million in assets.

Thanks to the work of 27 full-time employees in 2 offices in FL, the bank currently holds loans and leases worth $120.8 million, including real estate loans of $116.9 million. The bank currently holds $114.8 million in deposits from U.S. customers.

Overall, Bankrate believes that, as of December 31, 2017, First Bank of the Palm Beaches exhibited a generally satisfactory condition, earning 3 out of 5 stars for safety and soundness. Keep reading for an analysis of how the bank did on the three major criteria Bankrate used to evaluate U.S. banks.

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THE INSTITUTION'S SCORE

Capital Score

When it comes to measuring an a bank's financial fortitude, capital is important. It works as a bulwark against losses and as protection for depositors when a bank is struggling financially. When looking at safety and soundness, more capital is better.

On our test to measure capital adequacy, First Bank of the Palm Beaches received a score of 12 out of a possible 30 points, lower than the national average of 13.13.

One essential measure of this buffer is a bank's Tier 1 capital ratio. First Bank of the Palm Beaches's Tier 1 capital ratio was 13.22 percent, exceeding the 6 percent level regulators consider adequate, but lower than the national average of 25.65 percent. The higher the capital ratio, the better the bank will be able to weather financial difficulties.

Overall, First Bank of the Palm Beaches held equity amounting to 10.37 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 impact of troubled assets, such as unpaid loans, on the bank's reserves set aside to cover loan losses, as well as overall capitalization.

Having lots of these types of assets may eventually force a bank to use capital to cover losses, diminishing its equity buffer. It also means that there are likely to be many assets that are in non-accrual status and thus aren't earning interest for the bank, resulting in depressed earnings and potentially more risk of a future failure.

First Bank of the Palm Beaches did better than the national average of 37.49 on Bankrate's test of asset quality, racking up 40 out of a possible 40 points .

A helpful indicator of asset quality is the percentage of problem assets a bank holds compared to its total assets. As of December 31, 2017, 0.43 percent of First Bank of the Palm Beaches'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 keep a reserve to deal with 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 widely used indicator when evaluating a bank's ability to manage troubled assets. Unfortunately, the FDIC did not provide information on First Bank of the Palm Beaches's loan loss allowance in its most recent filings.

Earnings score

A bank's profitability has an effect on its safety and soundness. A bank can retain its earnings, increasing its capital buffer, or put them to work addressing problematic loans, likely making the bank better prepared to withstand financial trouble. Losses, on the other hand, diminish a bank's ability to do those things.

First Bank of the Palm Beaches fell behind the national average on Bankrate's test of earnings, achieving a score of 0 out of a possible 30.

Return on equity, calculated by dividing net income (profit, basically) by total equity, is one widely used measure of a bank's earnings. First Bank of the Palm Beaches's most recent annualized quarterly return on equity was -0.13 percent, below the national average of 8.10 percent.

The bank earned net income of $-19,000 on total equity of $14.6 million for the twelve months ended December 31, 2017. The bank had an annualized return on average assets, or ROA, of -0.01 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.