Safe and Sound

First Federal Bank of Florida

Lake City, FL
5
Star Rating
First Federal Bank of Florida is an FDIC-insured bank founded in 1961 and currently based in Lake City, FL. Regulatory filings show the bank having equity of $181.5 million on assets of $1.38 billion, as of December 31, 2017.

U.S. bank customers have $1.13 billion on deposit at 17 offices in FL run by 378 full-time employees. With that footprint, the bank has amassed loans and leases worth $683.5 million, including $394.2 million worth of real estate loans.

Overall, Bankrate believes that, as of December 31, 2017, First Federal Bank of Florida exhibited a superior condition, earning a full 5 stars for safety and soundness. Here's an analysis of how the bank did on the three major criteria Bankrate used to score U.S. banks on safety and soundness.

WHAT IS
SAFE AND SOUND?

Find out

THE INSTITUTION'S SCORE

Capital Score

Capital works as a buffer against losses and provides protection for depositors when a bank is experiencing financial instability. Therefore, a bank's level of capital is a crucial measurement of an institution's financial strength. When it comes to safety and soundness, more capital is better.

First Federal Bank of Florida finished below the national average of 13.13 on our test to measure capital adequacy, scoring 12 out of a possible 30 points.

One essential measure of this buffer is a bank's Tier 1 capital ratio. First Federal Bank of Florida's Tier 1 capital ratio was 20.13 percent, above the 6 percent level considered adequate by regulators, but under the national average of 25.65 percent. The higher the capital ratio, the better the bank will be able to stand up to economic headwinds.

Overall, First Federal Bank of Florida held equity amounting to 13.18 percent of its assets, which exceeded the national average of 12.03 percent.

Asset Quality Score

This test is intended to estimate how the bank's loan loss reserves and overall capitalization could be affected by troubled assets, such as unpaid mortgages.

Having large numbers of these kinds of assets suggests a bank may eventually have to use capital to absorb losses, reducing its cushion of equity. Many of those assets are also likely to be 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.

On Bankrate's test of asset quality, First Federal Bank of Florida scored 40 out of a possible 40 points, better than the national average of 37.49 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, 5.32 percent of First Federal Bank of Florida's loans were noncurrent -- in other words, they were more than 90 days past due or were in non-accrual status. That's above the national average of 1.01 percent.

Banks keep 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 at-risk loans can be a handy indicator when evaluating a bank's ability to manage problem assets. Unfortunately, the FDIC did not provide information on First Federal Bank of Florida's loan loss allowance in its most recent filings.

Earnings score

A bank's profitability affects its safety and soundness. Earnings can be retained by the bank, expanding its capital buffer, or be used to deal with problematic loans, potentially making the bank better prepared to withstand economic trouble. Obviously, banks that are losing money are less able to do those things.

On Bankrate's earnings test, First Federal Bank of Florida scored 18 out of a possible 30, beating the national average of 15.12.

Return on equity, calculated by dividing net income (essentially, profit) by the total amount of equity, is one important way to measure a bank's earnings. First Federal Bank of Florida's most recent annualized quarterly return on equity was 10.01 percent, above the national average of 8.10 percent.

For the twelve months ended December 31, 2017, the bank reported net income of $17.1 million on total equity of $181.5 million. The bank had an annualized return on average assets, or ROA, of 1.24 percent, above the 1 percent deemed satisfactory in accordance with industry standards, and above 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.