Safe and Sound

First Federal Savings and Loan Association of Lorain

Lorain, OH
4
Star Rating
First Federal Savings and Loan Association of Lorain is an FDIC-insured bank started in 1921 and currently based in Lorain, OH. As of December 31, 2017, the bank held equity of $63.4 million on $416.1 million in assets.

Thanks to the efforts of 93 full-time employees in 7 offices in OH, the bank currently holds loans and leases worth $236.8 million, including $237.5 million worth of real estate loans. The bank currently holds $349.8 million in deposits from U.S. customers.

Overall, Bankrate believes that, as of December 31, 2017, First Federal Savings and Loan Association of Lorain exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Keep reading for a breakdown of how the bank fared on the three important criteria Bankrate used to grade U.S. banks.

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THE INSTITUTION'S SCORE

Capital Score

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

On our test to measure capital adequacy, First Federal Savings and Loan Association of Lorain achieved a score of 22 out of a possible 30 points, beating the national average of 13.13.

A bank's Tier 1 capital ratio is a widely used measure of this buffer. First Federal Savings and Loan Association of Lorain's Tier 1 capital ratio was 32.81 percent, higher than the 6 percent level regulators consider adequate, and higher than the national average of 25.65 percent. The higher the capital ratio, the better the bank will be able to weather economic difficulties.

Overall, First Federal Savings and Loan Association of Lorain held equity amounting to 15.23 percent of its assets, which exceeded the national average of 12.03 percent.

Asset Quality Score

Bankrate uses this test to estimate 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 types of assets may eventually have to use capital to cover losses, cutting down on its cushion of equity. It also means that there are likely to be many assets that are in non-accrual status and thus aren't earning money, resulting in reduced earnings and potentially more risk of a failure in the future.

First Federal Savings and Loan Association of Lorain scored 32 out of a possible 40 points on Bankrate's test of asset quality, failing to reach the national average of 37.49.

The percentage of problem assets a bank holds compared to its total assets is a widely used indicator of asset quality.As of December 31, 2017, 4.96 percent of First Federal Savings and Loan Association of Lorain's loans were noncurrent, meaning 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 size of that reserve to the total amount of at-risk loans can be a useful indicator when evaluating a bank's ability to manage problem assets. Unfortunately, the FDIC did not provide information on First Federal Savings and Loan Association of Lorain's loan loss allowance in its most recent filings.

Earnings score

A bank's profitability has an effect on its long-term survivability. Earnings can be retained by the bank, increasing its capital buffer, or be used to deal with problematic loans, likely making the bank better prepared to withstand economic shocks. Conversely, losses diminish a bank's ability to do those things.

First Federal Savings and Loan Association of Lorain scored 2 out of a possible 30 on Bankrate's earnings test, lower than the national average of 15.12.

Return on equity, calculated by dividing net income (profit, basically) by total equity, is one key measure of a bank's earnings. First Federal Savings and Loan Association of Lorain's most recent annualized quarterly return on equity was 0.01 percent, below the national average of 8.10 percent.

For the twelve months ended December 31, 2017, the bank earned net income of $5,000 on total equity of $63.4 million. The bank reported an annualized return on average assets, or ROA, of 0.00 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.