Safe and Sound

North Valley Bank

Zanesville, OH
4
Star Rating
North Valley Bank is a Zanesville, OH-based, FDIC-insured bank started in 1904. The bank has equity of $19.5 million on $205.1 million in assets, according to December 31, 2017, regulatory filings.

Thanks to the efforts of 62 full-time employees in 5 offices in OH, the bank holds loans and leases worth $132.4 million, $110.9 million of which are for real estate. U.S. bank customers currently have $175.4 million in deposits with the bank.

Overall, Bankrate believes that, as of December 31, 2017, North Valley Bank exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Keep reading for an analysis of how the bank fared on the three major criteria Bankrate used to evaluate U.S. banks.

WHAT IS
SAFE AND SOUND?

Find out

THE INSTITUTION'S SCORE

Capital Score

Capital acts as a buffer against losses and affords protection for account holders during periods of financial trouble for the bank. It follows then that when it comes to measuring an an institution's financial resilience, capital is important. When looking at safety and soundness, the more capital, the better.

On our test to measure capital adequacy, North Valley Bank received a score of 10 out of a possible 30 points, falling short of the national average of 13.13.

One widely followed measure of this buffer is a bank's Tier 1 capital ratio. North Valley Bank's Tier 1 capital ratio was 13.72 percent, higher than the 6 percent level regulators consider adequate, 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, North Valley Bank held equity amounting to 9.53 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 unpaid mortgages.

Having large numbers of these types of assets means a bank could eventually have to use capital to absorb losses, diminishing its cushion 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 future failure.

On Bankrate's test of asset quality, North Valley Bank scored 36 out of a possible 40 points, falling short of the national average of 37.49 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, 1.29 percent of North Valley 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 to handle problem assets known as an "allowance for loan and lease losses." Comparing the size of that reserve to the total amount of at-risk loans can be a handy indicator when evaluating a bank's ability to manage problem assets. Unfortunately, the FDIC did not provide information on North Valley Bank's loan loss allowance in its most recent filings.

Earnings score

A bank's profitability has an effect on its long-term survivability. Earnings may be retained by the bank, increasing its capital buffer, or be used to deal with problematic loans, likely making the bank better able to withstand financial shocks. Banks that are losing money, however, are less able to do those things.

North Valley Bank did below-average on Bankrate's test of earnings, achieving a score of 14 out of a possible 30.

One key measure of a bank's earnings is return on equity, calculated by dividing net income (profit, essentially) by the total amount of equity. North Valley Bank's most recent annualized quarterly return on equity was 6.58 percent, below the national average of 8.10 percent.

The bank earned net income of $1.2 million on total equity of $19.5 million for the twelve months ended December 31, 2017. The bank experienced an annualized return on average assets, or ROA, of 0.60 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.