Safe and Sound

Los Alamos National Bank

2
Star Rating
Founded in 1963, Los Alamos National Bank is an FDIC-insured bank headquartered in Los Alamos, NM. Regulatory filings show the bank having equity of $122.5 million on $1.28 billion in assets, as of December 31, 2017.

Thanks to the work of 218 full-time employees in 6 offices in NM, the bank holds loans and leases worth $686.3 million, including real estate loans of $619.9 million. U.S. bank customers currently have $1.14 billion in deposits with the bank.

Overall, Bankrate believes that, as of December 31, 2017, Los Alamos National Bank exhibited a below-average condition, earning 2 out of 5 stars for safety and soundness. Keep reading for a look at how the bank fared on the three key criteria Bankrate used to score American banks.

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THE INSTITUTION'S SCORE

Capital Score

Capital is a valuable measurement of a bank's financial resilience. It acts as a buffer against losses and provides protection for depositors when a bank is experiencing economic instability. When it comes to safety and soundness, more capital is preferred.

Los Alamos National Bank received a score of 10 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 widely followed measure of this buffer is a bank's Tier 1 capital ratio. Los Alamos National Bank's Tier 1 capital ratio was 14.93 percent, higher than the 6 percent level considered adequate by regulators, but lower than the national average of 25.65 percent. A higher capital ratio means the bank will be better able to weather financial headwinds.

Overall, Los Alamos National Bank held equity amounting to 9.55 percent of its assets, which was lower than the national average of 12.03 percent.

Asset Quality Score

This test's purpose is to estimate how the bank's reserves set aside to cover loan losses, as well as overall capitalization, could be affected by problem assets, such as past-due loans.

Having large numbers of these kinds of assets may eventually force a bank to use capital to cover losses, diminishing its buffer of equity. It also means that there are likely to be many assets that are in non-accrual status and thus aren't earning money, resulting in diminished earnings and potentially more risk of a failure in the future.

Los Alamos National Bank came in below the national average of 37.49 on Bankrate's test of asset quality, racking up 32 out of a possible 40 points .

A helpful indicator of asset quality is the percentage of problem assets a bank holds compared to its total assets. As of December 31, 2017, 2.48 percent of Los Alamos National Bank's loans were noncurrent, meaning 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 maintain a reserve known as an "allowance for loan and lease losses" to deal with troubled assets . How large that reserve is can be a useful 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 Los Alamos National Bank's loan loss allowance in its most recent filings.

Earnings score

How profitable a bank is affects its safety and soundness. A bank can retain its earnings, boosting its capital cushion, or put them to work addressing problematic loans, likely making the bank better able to withstand financial trouble. Conversely, losses diminish a bank's ability to do those things.

Los Alamos National Bank received below-average marks on Bankrate's earnings test, achieving a score of 0 out of a possible 30.

One important way to measure a bank's earnings is return on equity, or net income (profit, basically) divided by total equity. Los Alamos National Bank's most recent annualized quarterly return on equity was -2.11 percent, below the national average of 8.10 percent.

The bank recorded net income of $-2.7 million on total equity of $122.5 million for the twelve months ended December 31, 2017. The bank reported an annualized return on average assets, or ROA, of -0.20 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.