Safe and Sound

Bank of Ontario

Ontario, WI
5
Star Rating
Bank of Ontario is an Ontario, WI-based, FDIC-insured bank founded in 1911. As of December 31, 2017, the bank had equity of $5.2 million on $41.3 million in assets.

Thanks to the work of 11 full-time employees in 2 offices in WI, the bank holds loans and leases worth $30.7 million, $22.5 million of which are for real estate. The bank currently holds $34.8 million in deposits from U.S. customers.

Overall, Bankrate believes that, as of December 31, 2017, Bank of Ontario exhibited a superior condition, earning a full 5 stars for safety and soundness. Keep reading for a look at how the bank did on the three important criteria Bankrate used to score U.S. banks on safety and soundness.

WHAT IS
SAFE AND SOUND?

Find out

THE INSTITUTION'S SCORE

Capital Score

When it comes to measuring an a bank's financial fortitude, capital is valuable. It acts as a bulwark against losses and affords protection for depositors when a bank is struggling financially. When it comes to safety and soundness, more capital is preferred.

Bank of Ontario scored 16 out of a possible 30 points on our test to measure capital adequacy, above the national average of 13.13.

One widely used measure of this buffer is a bank's Tier 1 capital ratio. Bank of Ontario's Tier 1 capital ratio was 25.02 percent, above the 6 percent level considered adequate by regulators, but less than the national average of 25.65 percent. A higher capital ratio suggests the bank will be better able to weather financial difficulties.

Overall, Bank of Ontario held equity amounting to 12.52 percent of its assets, which exceeded the national average of 12.03 percent.

Asset Quality Score

Bankrate uses this test to determine the effect of problem assets, such as past-due loans, on the bank's capitalization and allocated loan loss reserves.

A bank with lots of these kinds of assets could eventually have to use capital to cover losses, shrinking its equity cushion. It also means that there are likely to be many assets that are in non-accrual status and no longer earning money, resulting in diminished earnings and potentially more risk of a failure in the future.

Bank of Ontario scored 36 out of a possible 40 points on Bankrate's test of asset quality, lower than the national average of 37.49.

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, 1.30 percent of Bank of Ontario'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 maintain a reserve to handle troubled assets known as an "allowance for loan and lease losses." 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 Bank of Ontario's loan loss allowance in its most recent filings.

Earnings score

How profitable a bank is affects its safety and soundness. Earnings may be retained by the bank, boosting its capital buffer, or be used to deal with problematic loans, potentially making the bank more resilient in tough times. Conversely, losses reduce a bank's ability to do those things.

On Bankrate's earnings test, Bank of Ontario scored 24 out of a possible 30, above the national average of 15.12.

One key way to measure a bank's earnings is return on equity, calculated by dividing net income (essentially profit) by total equity. The most recent annualized quarterly return on equity for Bank of Ontario was 14.35 percent, above the national average of 8.10 percent.

The bank recorded net income of $728,000 on total equity of $5.2 million for the twelve months ended December 31, 2017. The bank had an annualized return on average assets, or ROA, of 1.83 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.