Safe and Sound

Community National Bank of Okarche

Okarche, OK
5
Star Rating
Okarche, OK-based Community National Bank of Okarche is an FDIC-insured bank founded in 1984. As of December 31, 2017, the bank had equity of $13.4 million on $105.9 million in assets.

U.S. bank customers have $83.9 million on deposit at 2 offices in OK run by 15 full-time employees. With that footprint, the bank has amassed loans and leases worth $43.9 million, including $15.9 million worth of real estate loans.

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

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SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

Capital works as a bulwark against losses and affords protection for depositors when a bank is struggling financially. Therefore, when it comes to measuring an an institution's financial resilience, capital is useful. When it comes to safety and soundness, more capital is preferred.

On our test to measure capital adequacy, Community National Bank of Okarche achieved a score of 16 out of a possible 30 points, better than the national average of 13.13.

One way to measure this buffer is looking at a bank's Tier 1 capital ratio. Community National Bank of Okarche's Tier 1 capital ratio was 24.02 percent, above the 6 percent level considered adequate by regulators, but under the national average of 25.65 percent. A higher capital ratio means the bank will be better able to weather financial headwinds.

Overall, Community National Bank of Okarche held equity amounting to 12.69 percent of its assets, which exceeded the national average of 12.03 percent.

Asset Quality Score

This test's purpose is to try to understand how the bank's loan loss reserves and overall capitalization could be affected by troubled assets, such as unpaid mortgages.

A bank with lots of these kinds of assets could eventually have to use capital to cover losses, reducing 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, reducing earnings and elevating the risk of a failure in the future.

Community National Bank of Okarche scored 40 out of a possible 40 points on Bankrate's test of asset quality, better than 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 Community National Bank of Okarche'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 maintain a reserve to handle troubled assets known as an "allowance for loan and lease losses." 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 problematic loans. Unfortunately, the FDIC did not provide information on Community National Bank of Okarche's loan loss allowance in its most recent filings.

Earnings score

How profitable a bank is has an effect on its long-term survivability. A bank can retain its earnings, boosting its capital cushion, or use them to deal with problematic loans, likely making the bank more resilient in tough times. However, banks that are losing money are less able to do those things.

Community National Bank of Okarche scored 22 out of a possible 30 on Bankrate's test of earnings, exceeding the national average of 15.12.

One important measure of a bank's earnings is return on equity, calculated by dividing net income (profit, basically) by total equity. Community National Bank of Okarche's most recent annualized quarterly return on equity was 13.27 percent, above the national average of 8.10 percent.

For the twelve months ended December 31, 2017, the bank recorded net income of $1.8 million on total equity of $13.4 million. The bank experienced an annualized return on average assets, or ROA, of 1.80 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.