Safe and Sound

First Northern Bank of Wyoming

Buffalo, WY
4
Star Rating
Started in 1885, First Northern Bank of Wyoming is an FDIC-insured bank based in Buffalo, WY. As of December 31, 2017, the bank had equity of $27.8 million on assets of $310.3 million.

U.S. bank customers have $275.3 million on deposit at 3 offices in WY run by 78 full-time employees. With that footprint, the bank has amassed loans and leases worth $209.7 million, $139.8 million of which are for real estate.

Overall, Bankrate believes that, as of December 31, 2017, First Northern Bank of Wyoming exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Keep reading for a breakdown of how the bank did on the three major criteria Bankrate used to grade U.S. banks.

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THE INSTITUTION'S SCORE

Capital Score

Capital acts as a buffer against losses and provides protection for account holders during times of financial trouble for the bank. Therefore, when it comes to measuring an an institution's financial resilience, capital is useful. From a safety and soundness perspective, the more capital, the better.

First Northern Bank of Wyoming received a score of 8 out of a possible 30 points on our test to measure the adequacy of a bank's capital, falling short of the national average of 13.13.

One important measure of this buffer is a bank's Tier 1 capital ratio. First Northern Bank of Wyoming's Tier 1 capital ratio was 12.97 percent, higher than the 6 percent level considered adequate by regulators, but below the national average of 25.65 percent. The higher the capital ratio, the better the bank will be able to weather financial downturns.

Overall, First Northern Bank of Wyoming held equity amounting to 8.96 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 reserves set aside to cover loan losses, as well as overall capitalization.

Having large numbers of these types of assets means a bank could have to use capital to cover losses, decreasing its equity cushion. Many of those assets are also likely to be in non-accrual status and thus aren't earning money, resulting in diminished earnings and potentially more risk of a failure in the future.

First Northern Bank of Wyoming finished below the national average of 37.49 on Bankrate's asset quality test, racking up 32 out of a possible 40 points .

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, 2.01 percent of First Northern Bank of Wyoming'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 . The size of that reserve can be a useful indicator when evaluating a bank's ability to manage problem assets, especially when compared to the total amount of problem loans. Unfortunately, the FDIC did not provide information on First Northern Bank of Wyoming's loan loss allowance in its most recent filings.

Earnings score

A bank's earnings performance 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.

First Northern Bank of Wyoming beat the national average on Bankrate's earnings test, achieving a score of 22 out of a possible 30.

One key way to measure a bank's earnings is return on equity, or net income (profit, basically) divided by the total amount of equity. First Northern Bank of Wyoming's most recent annualized quarterly return on equity was 12.31 percent, above the national average of 8.10 percent.

The bank earned net income of $3.4 million on total equity of $27.8 million for the twelve months ended December 31, 2017. The bank had an annualized return on average assets, or ROA, of 1.14 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.