Safe and Sound

First Federal Savings and Loan Association

Centerburg, OH
5
Star Rating
First Federal Savings and Loan Association is an FDIC-insured bank started in 1934 and currently headquartered in Centerburg, OH. Regulatory filings show the bank having equity of $4.5 million on $23.8 million in assets, as of December 31, 2017.

With 4 full-time employees, the bank holds loans and leases worth $14.9 million, including real estate loans of $14.9 million. U.S. bank customers currently have $18.7 million in deposits with the bank.

Overall, Bankrate believes that, as of December 31, 2017, First Federal Savings and Loan Association exhibited a superior condition, earning a full 5 stars for safety and soundness. Keep reading for an analysis of how the bank fared on the three key criteria Bankrate used to score American banks on safety and soundness.

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SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

Capital is a crucial measurement of an institution's financial strength. It works as a cushion against losses and provides protection for accountholders when a bank is struggling financially. From a safety and soundness perspective, more capital is better.

First Federal Savings and Loan Association exceeded the national average of 13.13 points on our test to measure the adequacy of a bank's capital, receiving a score of 28 out of a possible 30 points.

One important measure of this buffer is a bank's Tier 1 capital ratio. First Federal Savings and Loan Association's Tier 1 capital ratio was 38.93 percent, exceeding the 6 percent level considered adequate by regulators, and above the national average of 25.65 percent. A higher capital ratio suggests the bank will be better able to stand up to economic headwinds.

Overall, First Federal Savings and Loan Association held equity amounting to 18.99 percent of its assets, which exceeded the national average of 12.03 percent.

Asset Quality Score

This test's purpose is to estimate how the bank's reserves set aside to cover loan losses, as well as overall capitalization, could be affected by troubled assets, such as unpaid loans.

A bank with large numbers of these types of assets may eventually be required to use capital to absorb losses, shrinking its equity buffer. It also means that there are likely to be many assets that are in non-accrual status and no longer earning interest for the bank, decreasing earnings and increasing the chances of a failure in the future.

First Federal Savings and Loan Association did better than the national average of 37.49 on Bankrate's asset quality test, racking up 40 out of a possible 40 points .

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, none of First Federal Savings and Loan Association'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 known as an "allowance for loan and lease losses" to deal with problem assets . Comparing the reserve's size to the total amount of problem loans can be a useful indicator when evaluating a bank's ability to manage troubled assets. Unfortunately, the FDIC did not provide information on First Federal Savings and Loan Association's loan loss allowance in its most recent filings.

Earnings score

How profitable a bank is affects its long-term survivability. A bank can retain its earnings, expanding its capital cushion, or put them to work addressing problematic loans, potentially making the bank more resilient in times of trouble. Losses, on the other hand, diminish a bank's ability to do those things.

First Federal Savings and Loan Association scored 6 out of a possible 30 on Bankrate's earnings test, less than the national average of 15.12.

One key measure of a bank's earnings is return on equity, or net income (profit, basically) divided by total equity. The most recent annualized quarterly return on equity for First Federal Savings and Loan Association was 2.04 percent, below the national average of 8.10 percent.

For the twelve months ended December 31, 2017, the bank reported net income of $91,000 on total equity of $4.5 million. The bank reported an annualized return on average assets, or ROA, of 0.38 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.