Safe and Sound

First National Bank of Louisiana

Crowley, LA
5
Star Rating
First National Bank of Louisiana is a Crowley, LA-based, FDIC-insured bank founded in 1924. Regulatory filings show the bank having equity of $42.2 million on assets of $385.6 million, as of December 31, 2017.

U.S. bank customers have $310.5 million on deposit at 5 offices in LA run by 66 full-time employees. With that footprint, the bank has amassed loans and leases worth $286.1 million, $226.1 million of which are for real estate.

Overall, Bankrate believes that, as of December 31, 2017, First National Bank of Louisiana exhibited a superior condition, earning a full 5 stars for safety and soundness. Here's a look at how the bank fared on the three key criteria Bankrate used to grade U.S. banks on safety and soundness.

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THE INSTITUTION'S SCORE

Capital Score

When it comes to measuring an an institution's financial resilience, capital is valuable. It works as a buffer against losses and provides protection for accountholders when a bank is experiencing economic instability. When looking at safety and soundness, more capital is preferred.

First National Bank of Louisiana fell short of the national average of 13.13 on our test to measure the adequacy of a bank's capital, receiving a score of 12 out of a possible 30 points.

One widely followed measure of this buffer is a bank's Tier 1 capital ratio. First National Bank of Louisiana's Tier 1 capital ratio was 14.82 percent, above the 6 percent level regulators consider adequate, but below the national average of 25.65 percent. A higher capital ratio suggests the bank will be better able to weather economic headwinds.

Overall, First National Bank of Louisiana held equity amounting to 10.93 percent of its assets, which was lower than the national average of 12.03 percent.

Asset Quality Score

This test is intended to try to understand how the bank's reserves set aside to cover loan losses, as well as overall capitalization, could be affected by troubled assets, such as unpaid loans.

Having extensive holdings of these types of assets means a bank may eventually have to use capital to cover losses, shrinking its buffer of equity. Many of those assets are also likely to be in non-accrual status and thus aren't earning interest for the bank, reducing earnings and increasing the risk of a future failure.

First National Bank of Louisiana scored 40 out of a possible 40 points on Bankrate's asset quality test, above the national average of 37.49.

A widely used indicator of asset quality is the percentage of problem assets a bank holds compared to its total assets. As of December 31, 2017, none of First National Bank of Louisiana'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 known as an "allowance for loan and lease losses" to deal with troubled assets . The size of that reserve can be a helpful indicator when evaluating a bank's ability to manage problem assets, especially when compared to the total amount of at-risk loans. Unfortunately, the FDIC did not provide information on First National Bank of Louisiana's loan loss allowance in its most recent filings.

Earnings score

A bank's profitability affects its safety and soundness. Earnings can be retained by the bank, expanding its capital cushion, or be used to deal with problematic loans, likely making the bank better able to withstand financial trouble. Obviously, banks that are losing money are less able to do those things.

First National Bank of Louisiana outperformed the average on Bankrate's test of earnings, achieving a score of 24 out of a possible 30.

Return on equity, calculated by dividing net income (essentially, profit) by the total amount of equity, is one important way to measure a bank's earnings. The most recent annualized quarterly return on equity for First National Bank of Louisiana was 16.26 percent, above the national average of 8.10 percent.

For the twelve months ended December 31, 2017, the bank recorded net income of $6.6 million on total equity of $42.2 million. The bank reported an annualized return on average assets, or ROA, of 1.75 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.