Safe and Sound

TotalBank

Miami, FL
4
Star Rating
Miami, FL-based TotalBank is an FDIC-insured bank founded in 1974. Regulatory filings show the bank having equity of $502.0 million on assets of $3.01 billion, as of December 31, 2017.

Thanks to the work of 298 full-time employees in 19 offices in FL, the bank holds loans and leases worth $2.15 billion, including $1.94 billion worth of real estate loans. U.S. bank customers currently have $2.09 billion in deposits with the bank.

Overall, Bankrate believes that, as of December 31, 2017, TotalBank 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 score American banks.

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SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

Capital is an important measurement of an institution's financial strength. It acts as a bulwark against losses and as protection for depositors when a bank is experiencing financial trouble. From a safety and soundness perspective, more capital is preferred.

On our test to measure capital adequacy, TotalBank achieved a score of 16 out of a possible 30 points, better than the national average of 13.13.

One essential measure of this buffer is a bank's Tier 1 capital ratio. TotalBank's Tier 1 capital ratio was 17.79 percent, exceeding the 6 percent level regulators consider adequate, but below the national average of 25.65 percent. The higher the capital ratio, the better the bank will be able to weather financial difficulties.

Overall, TotalBank held equity amounting to 16.68 percent of its assets, which exceeded the national average of 12.03 percent.

Asset Quality Score

This test is intended to estimate how the bank's loan loss reserves and overall capitalization could be affected by troubled assets, such as unpaid loans.

Having extensive holdings of these types of assets could eventually force a bank to use capital to absorb losses, reducing its buffer of equity. 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, resulting in depressed earnings and potentially more risk of a future failure.

On Bankrate's asset quality test, TotalBank scored 40 out of a possible 40 points, beating the national average of 37.49 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, 0.56 percent of TotalBank'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 to handle troubled assets known as an "allowance for loan and lease losses." 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 TotalBank'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, expanding its capital cushion, or be used to deal with problematic loans, potentially making the bank better able to withstand financial shocks. However, banks that are losing money have less ability to do those things.

On Bankrate's test of earnings, TotalBank scored 10 out of a possible 30, below the national average of 15.12.

Return on equity, calculated by dividing net income (profit, basically) by the total amount of equity, is one key measure of a bank's earnings. The most recent annualized quarterly return on equity for TotalBank was 4.90 percent, below the national average of 8.10 percent.

The bank recorded net income of $24.0 million on total equity of $502.0 million for the twelve months ended December 31, 2017. The bank had an annualized return on average assets, or ROA, of 0.80 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.