Safe and Sound

First Federal Savings of Middletown

Middletown, NY
4
Star Rating
First Federal Savings of Middletown is a Middletown, NY-based, FDIC-insured bank that opened its doors in 1888. As of December 31, 2017, the bank held equity of $53.8 million on assets of $150.6 million.

Thanks to the work of 12 full-time employees, the bank has amassed loans and leases worth $23.3 million, $23.5 million of which are for real estate. The bank currently holds $89.9 million in deposits from U.S. customers.

Overall, Bankrate believes that, as of December 31, 2017, First Federal Savings of Middletown exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Here's a look at how the bank did on the three key criteria Bankrate used to evaluate U.S. banks.

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THE INSTITUTION'S SCORE

Capital Score

Capital works as a buffer against losses and provides protection for depositors when a bank is struggling financially. Therefore, a bank's level of capital is a key measurement of an institution's financial strength. When looking at safety and soundness, more capital is better.

On our test to measure capital adequacy, First Federal Savings of Middletown racked up 30 out of a possible 30 points, beating out the national average of 13.13.

One widely followed measure of this buffer is a bank's Tier 1 capital ratio. First Federal Savings of Middletown's Tier 1 capital ratio was 105.33 percent, higher than the 6 percent level considered adequate by regulators, and above the national average of 25.65 percent. A higher capital ratio means the bank will be better able to weather financial challenges.

Overall, First Federal Savings of Middletown held equity amounting to 35.72 percent of its assets, which exceeded the national average of 12.03 percent.

Asset Quality Score

In this test, Bankrate tries to determine the impact of troubled assets, such as unpaid mortgages, on the bank's capitalization and allocated loan loss reserves.

Having extensive holdings of these types of assets may eventually require a bank to use capital to cover losses, reducing its cushion of equity. Many of those assets are also likely to be in non-accrual status and no longer earning interest for the bank, resulting in diminished earnings and potentially more risk of a future failure.

First Federal Savings of Middletown scored above the national average of 37.49 on Bankrate's asset quality test, racking up 40 out of a possible 40 points .

A useful indicator of asset quality is the percentage of problem assets a bank holds compared to its total assets. As of December 31, 2017, 1.30 percent of First Federal Savings of Middletown'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 known as an "allowance for loan and lease losses" to deal with problem assets . Comparing the reserve's size to the total amount of problematic 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 of Middletown's loan loss allowance in its most recent filings.

Earnings score

A bank's profitability affects its long-term survivability. Earnings may be retained by the bank, boosting its capital cushion, or be used to deal with problematic loans, likely making the bank better able to withstand economic trouble. Conversely, losses diminish a bank's ability to do those things.

First Federal Savings of Middletown scored 0 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, calculated by dividing net income (essentially profit) by total equity. The most recent annualized quarterly return on equity for First Federal Savings of Middletown was -2.02 percent, below the national average of 8.10 percent.

For the twelve months ended December 31, 2017, the bank reported net income of $-1.1 million on total equity of $53.8 million. The bank reported an annualized return on average assets, or ROA, of -0.72 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.