Safe and Sound

First Federal Savings Bank

Huntington, IN
5
Star Rating
Huntington, IN-based First Federal Savings Bank is an FDIC-insured bank founded in 1932. Regulatory filings show the bank having equity of $35.3 million on assets of $314.1 million, as of December 31, 2017.

Thanks to the efforts of 70 full-time employees in 6 offices in IN, the bank currently holds loans and leases worth $226.2 million, including $167.7 million worth of real estate loans. The bank currently holds $212.5 million in deposits from U.S. customers.

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

WHAT IS
SAFE AND SOUND?

Find out

THE INSTITUTION'S SCORE

Capital Score

Capital works as a cushion against losses and provides protection for depositors when a bank is struggling financially. Therefore, when it comes to measuring an a bank's financial resilience, capital is crucial. When it comes to safety and soundness, more capital is preferred.

On our test to measure the adequacy of a bank's capital, First Federal Savings Bank received a score of 12 out of a possible 30 points, lower than the national average of 13.13.

One way to measure this buffer is looking at a bank's Tier 1 capital ratio. First Federal Savings Bank's Tier 1 capital ratio was 14.78 percent, higher than the 6 percent level considered adequate by regulators, but under the national average of 25.65 percent. A higher capital ratio suggests the bank will be better able to weather economic challenges.

Overall, First Federal Savings Bank held equity amounting to 11.24 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 capitalization and allocated loan loss reserves.

A bank with a large number of these kinds of assets could eventually have to use capital to cover losses, decreasing its cushion of equity. Many of those assets are also likely to be in non-accrual status and no longer earning money, resulting in lower earnings and potentially more risk of a failure in the future.

First Federal Savings Bank scored 40 out of a possible 40 points on Bankrate's asset quality test, exceeding the national average of 37.49.

The percentage of problem assets a bank holds compared to its total assets is a handy indicator of asset quality.As of December 31, 2017, 0.99 percent of First Federal Savings Bank'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." How large that reserve is can be a helpful indicator when evaluating a bank's ability to manage problem assets, especially when compared to the total amount of problematic loans. Unfortunately, the FDIC did not provide information on First Federal Savings Bank's loan loss allowance in its most recent filings.

Earnings score

How profitable a bank is affects its safety and soundness. Earnings may be retained by the bank, increasing its capital cushion, or be used to deal with problematic loans, likely making the bank better prepared to withstand economic trouble. Conversely, losses take away from a bank's ability to do those things.

On Bankrate's earnings test, First Federal Savings Bank scored 18 out of a possible 30, above 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 measure of a bank's earnings. First Federal Savings Bank's most recent annualized quarterly return on equity was 10.16 percent, above the national average of 8.10 percent.

The bank reported net income of $3.5 million on total equity of $35.3 million for the twelve months ended December 31, 2017. The bank reported an annualized return on average assets, or ROA, of 1.16 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.