Safe and Sound

Legacy Bank of Florida

Boca Raton, FL
4
Star Rating
Legacy Bank of Florida is an FDIC-insured bank started in 2006 and currently based in Boca Raton, FL. As of December 31, 2017, the bank held equity of $39.7 million on $377.9 million in assets.

Thanks to the work of 48 full-time employees in 5 offices in FL, the bank has amassed loans and leases worth $309.0 million, $271.6 million of which are for real estate. The bank currently holds $276.3 million in deposits from U.S. customers.

Overall, Bankrate believes that, as of December 31, 2017, Legacy Bank of Florida exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Here's a breakdown of how the bank fared on the three important criteria Bankrate used to evaluate U.S. banks.

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THE INSTITUTION'S SCORE

Capital Score

Capital is an important measurement of a bank's financial fortitude. It acts as a bulwark against losses and as protection for depositors when a bank is experiencing economic instability. When looking at safety and soundness, more capital is preferred.

On our test to measure capital adequacy, Legacy Bank of Florida received a score of 12 out of a possible 30 points, failing to reach the national average of 13.13.

A bank's Tier 1 capital ratio is a widely followed measure of this buffer. Legacy Bank of Florida's Tier 1 capital ratio was 11.18 percent, above the 6 percent level considered adequate by regulators, but lower 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, Legacy Bank of Florida held equity amounting to 10.51 percent of its assets, which was lower than the national average of 12.03 percent.

Asset Quality Score

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

Having extensive holdings of these types of assets means a bank could have to use capital to cover losses, diminishing its equity buffer. It also means that there are likely to be many assets that are in non-accrual status and thus aren't earning money, decreasing earnings and increasing the risk of a future failure.

Legacy Bank of Florida scored 40 out of a possible 40 points on Bankrate's test of asset quality, 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, none of Legacy Bank of Florida's loans were noncurrent, meaning 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 troubled assets . That reserve's size can be a widely used indicator when evaluating a bank's ability to manage troubled assets, especially when compared to the total amount of problematic loans. Unfortunately, the FDIC did not provide information on Legacy Bank of Florida's loan loss allowance in its most recent filings.

Earnings score

A bank's profitability has an effect on its long-term survivability. A bank can retain its earnings, increasing its capital buffer, or put them to work addressing problematic loans, likely making the bank more resilient in times of trouble. Losses, on the other hand, diminish a bank's ability to do those things.

On Bankrate's test of earnings, Legacy Bank of Florida scored 4 out of a possible 30, falling short of the national average of 15.12.

One important way to measure a bank's earnings is return on equity, calculated by dividing net income (profit, basically) by total equity. The most recent annualized quarterly return on equity for Legacy Bank of Florida was 1.50 percent, below the national average of 8.10 percent.

For the twelve months ended December 31, 2017, the bank earned net income of $556,000 on total equity of $39.7 million. The bank had an annualized return on average assets, or ROA, of 0.16 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.