Safe and Sound

Optum Bank, Inc.

Salt Lake City, UT
5
Star Rating
Optum Bank, Inc. is an FDIC-insured bank started in 2003 and currently based in Salt Lake City, UT. As of December 31, 2017, the bank had equity of $993.3 million on $8.11 billion in assets.

Thanks to the efforts of 159 full-time employees, the bank currently holds loans and leases worth $711.9 million, including real estate loans of $470.7 million. The bank currently holds $6.74 billion in deposits from U.S. customers.

Overall, Bankrate believes that, as of December 31, 2017, Optum Bank, Inc. 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 important criteria Bankrate used to grade American banks on safety and soundness.

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SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

Capital is an essential measurement of an institution's financial resilience. It works as a cushion against losses and as protection for accountholders during periods of financial trouble for the bank. When it comes to safety and soundness, the more capital, the better.

Optum Bank, Inc. received a score of 8 out of a possible 30 points on our test to measure capital adequacy, below the national average of 13.13.

One important measure of this buffer is a bank's Tier 1 capital ratio. Optum Bank, Inc.'s Tier 1 capital ratio was 17.22 percent, higher than the 6 percent level regulators consider adequate, but under the national average of 25.65 percent. The higher the capital ratio, the better the bank will be able to stand up to financial downturns.

Overall, Optum Bank, Inc. held equity amounting to 12.24 percent of its assets, which exceeded the national average of 12.03 percent.

Asset Quality Score

In this test, Bankrate tries to estimate the effect of troubled assets, such as unpaid loans, on the bank's capitalization and allocated loan loss reserves.

Having large numbers of these types of assets suggests a bank may have to use capital to cover losses, cutting down on 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 interest for the bank, resulting in lower earnings and potentially more risk of a future failure.

Optum Bank, Inc. scored 40 out of a possible 40 points on Bankrate's test of asset quality, exceeding the national average of 37.49.

A handy indicator of asset quality is the percentage of problem assets a bank holds compared to its total assets. As of December 31, 2017, 0.28 percent of Optum Bank, Inc.'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 known as an "allowance for loan and lease losses" to deal with troubled assets . The size of that reserve can be a handy 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 Optum Bank, Inc.'s loan loss allowance in its most recent filings.

Earnings score

A bank's profitability affects its safety and soundness. A bank can retain its earnings, expanding its capital cushion, or put them to work addressing problematic loans, potentially making the bank better prepared to withstand economic trouble. Obviously, banks that are losing money have less ability to do those things.

Optum Bank, Inc. scored 22 out of a possible 30 on Bankrate's test of earnings, beating the national average of 15.12.

Return on equity, calculated by dividing net income (essentially, profit) by total equity, is one important way to measure a bank's earnings. The most recent annualized quarterly return on equity for Optum Bank, Inc. was 13.46 percent, above the national average of 8.10 percent.

The bank reported net income of $124.1 million on total equity of $993.3 million for the twelve months ended December 31, 2017. The bank reported an annualized return on average assets, or ROA, of 1.62 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.