Safe and Sound

The First National Bank of Layton

Layton, UT
5
Star Rating
The First National Bank of Layton is a Layton, UT-based, FDIC-insured bank started in 1905. As of June 30, 2017, the bank had equity of $40.6 million on assets of $321.1 million.

Thanks to the efforts of 86 full-time employees in 8 offices in UT, the bank holds loans and leases worth $235.8 million, including $190.1 million worth of real estate loans. U.S. bank customers currently have $277.1 million in deposits with the bank.

Overall, Bankrate believes that, as of June 30, 2017, The First National Bank of Layton exhibited a superior condition, earning a full 5 stars for safety and soundness. Here's a look at how the bank did on the three major criteria Bankrate used to grade U.S. banks on safety and soundness.

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THE INSTITUTION'S SCORE

Capital Score

Capital works as a cushion against losses and affords protection for accountholders during periods of financial trouble for the bank. Therefore, a bank's level of capital is an important measurement of a bank's financial resilience. From a safety and soundness perspective, more capital is preferred.
The First National Bank of Layton scored 16 out of a possible 30 points on our test to measure the adequacy of a bank's capital, beating the national average of 13.38.

A bank's Tier 1 capital ratio is an essential measure of this buffer. The First National Bank of Layton's Tier 1 capital ratio was 15.15 percent, exceeding the 6 percent level regulators consider adequate, but below the national average of 25.16 percent. The higher the capital ratio, the better the bank will be able to stand up to economic difficulties.

Overall, The First National Bank of Layton held equity amounting to 12.63 percent of its assets, which exceeded the national average of 12.10 percent.

Asset Quality Score

This test's purpose is to try to understand how the bank's capitalization and allocated loan loss reserves could be affected by problem assets, such as unpaid mortgages.

Having a large number of these kinds of assets may eventually require a bank to use capital to absorb losses, shrinking its equity buffer. Many of those assets are also likely to be in non-accrual status and no longer earning money, reducing earnings and elevating the risk of a future failure.

The First National Bank of Layton scored 40 out of a possible 40 points on Bankrate's asset quality test, better than the national average of 37.62.

The percentage of problem assets a bank holds compared to its total assets is a helpful indicator of asset quality.As of June 30, 2017, 0.39 percent of The First National Bank of Layton'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 1.04 percent.

Banks maintain a reserve to handle problem assets known as an "allowance for loan and lease losses." The size of that reserve can be a useful indicator when evaluating a bank's ability to manage troubled assets, especially when compared to the total amount of at-risk loans. Unfortunately, the FDIC did not provide information on The First National Bank of Layton's loan loss allowance in its most recent filings.

Earnings score

How profitable a bank is affects its long-term survivability. Earnings may be retained by the bank, boosting its capital buffer, or be used to address problematic loans, potentially making the bank better able to withstand financial trouble. Conversely, losses lessen a bank's ability to do those things.

On Bankrate's earnings test, The First National Bank of Layton scored 22 out of a possible 30, exceeding the national average of 16.52.

One important measure of a bank's earnings is return on equity, or net income (essentially profit) divided by the total amount of equity. The most recent annualized quarterly return on equity for The First National Bank of Layton was 13.65 percent, above the national average of 9.28 percent.

For the twelve months ended June 30, 2017, the bank reported net income of $2.7 million on total equity of $40.6 million. The bank reported an annualized return on average assets, or ROA, of 1.74 percent, above the 1 percent deemed satisfactory in accordance with industry standards, and above the average for U.S. banks of 1.14 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.