Safe and Sound

The Apple Creek Banking Company

Apple Creek, OH
4
Star Rating
The Apple Creek Banking Company is an Apple Creek, OH-based, FDIC-insured bank founded in 1904. The bank has equity of $10.4 million on assets of $129.5 million, according to December 31, 2017, regulatory filings.

U.S. bank customers have $118.2 million on deposit at 6 offices in OH run by 43 full-time employees. With that footprint, the bank currently holds loans and leases worth $94.6 million, including real estate loans of $86.5 million.

Overall, Bankrate believes that, as of December 31, 2017, The Apple Creek Banking Company exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Keep reading for an analysis of how the bank did on the three important criteria Bankrate used to evaluate U.S. banks.

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THE INSTITUTION'S SCORE

Capital Score

Capital acts as a bulwark against losses and as protection for account holders during periods of financial trouble for the bank. Therefore, a bank's level of capital is an important measurement of an institution's financial strength. When it comes to safety and soundness, the more capital, the better.

The Apple Creek Banking Company fell short of the national average of 13.13 on our test to measure capital adequacy, achieving a score of 6 out of a possible 30 points.

One way to measure this buffer is looking at a bank's Tier 1 capital ratio. The Apple Creek Banking Company's Tier 1 capital ratio was 12.01 percent, exceeding the 6 percent level regulators consider adequate, but below the national average of 25.65 percent. The higher the capital ratio, the better the bank will be able to stand up to financial headwinds.

Overall, The Apple Creek Banking Company held equity amounting to 8.05 percent of its assets, which was lower than the national average of 12.03 percent.

Asset Quality Score

This test is intended to estimate how the bank's loan loss reserves and overall capitalization could be affected by problem assets, such as unpaid loans.

Having extensive holdings of these types of assets means a bank may have to use capital to absorb losses, diminishing its equity buffer. Many of those assets are also likely to be in non-accrual status and no longer earning interest for the bank, resulting in lower earnings and potentially more risk of a failure in the future.

On Bankrate's test of asset quality, The Apple Creek Banking Company scored 40 out of a possible 40 points, beating out the national average of 37.49 points.

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, 0.26 percent of The Apple Creek Banking Company'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 keep a reserve to deal with problem assets known as an "allowance for loan and lease losses." Comparing the reserve's size to the total amount of problematic loans can be a handy indicator when evaluating a bank's ability to manage problem assets. Unfortunately, the FDIC did not provide information on The Apple Creek Banking Company's loan loss allowance in its most recent filings.

Earnings score

How profitable a bank is has an effect on 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. Losses, on the other hand, lessen a bank's ability to do those things.

The Apple Creek Banking Company exceeded the national average on Bankrate's earnings test, achieving a score of 18 out of a possible 30.

One key way to measure a bank's earnings is return on equity, or net income (profit, essentially) divided by total equity. The Apple Creek Banking Company's most recent annualized quarterly return on equity was 9.13 percent, above the national average of 8.10 percent.

For the twelve months ended December 31, 2017, the bank earned net income of $936,000 on total equity of $10.4 million. The bank reported an annualized return on average assets, or ROA, of 0.66 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.