Safe and Sound

First Federal Savings and Loan Association

Delta, OH
4
Star Rating
First Federal Savings and Loan Association is an FDIC-insured bank started in 1934 and currently based in Delta, OH. As of December 31, 2017, the bank had equity of $19.7 million on assets of $161.8 million.

With 39 full-time employees in 6 offices in OH, the bank holds loans and leases worth $86.1 million, including real estate loans of $84.8 million. U.S. bank customers currently have $141.6 million in deposits with the bank.

Overall, Bankrate believes that, as of December 31, 2017, First Federal Savings and Loan Association exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Keep reading for a look at how the bank did on the three key criteria Bankrate used to evaluate American banks.

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THE INSTITUTION'S SCORE

Capital Score

Capital works as a bulwark against losses and affords protection for account holders when a bank is struggling financially. Therefore, a bank's level of capital is an essential measurement of an institution's financial strength. When it comes to safety and soundness, the higher the capital, the better.

First Federal Savings and Loan Association beat out the national average of 13.13 points on our test to measure the adequacy of a bank's capital, scoring 16 out of a possible 30 points.

One essential measure of this buffer is a bank's Tier 1 capital ratio. First Federal Savings and Loan Association's Tier 1 capital ratio was 33.76 percent, higher than the 6 percent level regulators consider adequate, and above the national average of 25.65 percent. The higher the capital ratio, the better the bank will be able to stand up to financial headwinds.

Overall, First Federal Savings and Loan Association held equity amounting to 12.18 percent of its assets, which exceeded the national average of 12.03 percent.

Asset Quality Score

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

A bank with extensive holdings of these kinds of assets may eventually be forced to use capital to cover 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 money, resulting in reduced earnings and potentially more risk of a failure in the future.

On Bankrate's test of asset quality, First Federal Savings and Loan Association scored 40 out of a possible 40 points, beating the national average of 37.49 points.

The percentage of problem assets a bank holds compared to its total assets is a useful indicator of asset quality.As of December 31, 2017, 0.85 percent 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 to deal with troubled assets known as an "allowance for loan and lease losses." That reserve's size can be a handy indicator when evaluating a bank's ability to manage troubled assets, especially when compared to the total amount of problem loans. 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

A bank's earnings performance has an effect on its safety and soundness. A bank can retain its earnings, boosting its capital cushion, or put them to work addressing problematic loans, likely making the bank better able to withstand economic trouble. Conversely, losses take away from a bank's ability to do those things.

First Federal Savings and Loan Association received below-average marks on Bankrate's test of earnings, achieving a score of 4 out of a possible 30.

One widely used measure of a bank's earnings is return on equity, calculated by dividing net income (profit, basically) by the total amount of equity. First Federal Savings and Loan Association's most recent annualized quarterly return on equity was 1.65 percent, below the national average of 8.10 percent.

The bank recorded net income of $322,000 on total equity of $19.7 million for the twelve months ended December 31, 2017. The bank had an annualized return on average assets, or ROA, of 0.20 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.