Safe and Sound

The Fayette County National Bank of Fayetteville

Fayetteville, WV
4
Star Rating
The Fayette County National Bank of Fayetteville is an FDIC-insured bank founded in 1900 and currently headquartered in Fayetteville, WV. Regulatory filings show the bank having equity of $10.8 million on assets of $87.9 million, as of December 31, 2017.

Thanks to the work of 32 full-time employees in 3 offices in WV, the bank holds loans and leases worth $61.6 million, $58.4 million of which are for real estate. U.S. bank customers currently have $73.9 million in deposits with the bank.

Overall, Bankrate believes that, as of December 31, 2017, The Fayette County National Bank of Fayetteville 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 key criteria Bankrate used to evaluate American banks.

WHAT IS
SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

Capital acts as a cushion against losses and affords protection for account holders when a bank is struggling financially. Therefore, a bank's level of capital is a useful measurement of a bank's financial fortitude. When it comes to safety and soundness, more capital is preferred.

On our test to measure the adequacy of a bank's capital, The Fayette County National Bank of Fayetteville racked up 16 out of a possible 30 points, exceeding the national average of 13.13.

One way to measure this buffer is looking at a bank's Tier 1 capital ratio. The Fayette County National Bank of Fayetteville's Tier 1 capital ratio was 23.14 percent, higher than the 6 percent level considered adequate by regulators, but lower than the national average of 25.65 percent. The higher the capital ratio, the better the bank will be able to weather financial downturns.

Overall, The Fayette County National Bank of Fayetteville held equity amounting to 12.27 percent of its assets, which exceeded the national average of 12.03 percent.

Asset Quality Score

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

A bank with large numbers of these kinds of assets may eventually be required to use capital to cover losses, decreasing its cushion of equity. It also means that there are likely to be many assets that are in non-accrual status and no longer earning money, reducing earnings and increasing the chances of a failure in the future.

The Fayette County National Bank of Fayetteville scored 36 out of a possible 40 points on Bankrate's test of asset quality, less 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, 1.93 percent of The Fayette County National Bank of Fayetteville'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 keep a reserve to deal with troubled 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 helpful indicator when evaluating a bank's ability to manage troubled assets. Unfortunately, the FDIC did not provide information on The Fayette County National Bank of Fayetteville's loan loss allowance in its most recent filings.

Earnings score

How profitable a bank is affects its safety and soundness. A bank can retain its earnings, increasing its capital cushion, or put them to work addressing problematic loans, potentially making the bank better able to withstand financial trouble. Banks that are losing money, however, have less ability to do those things.

The Fayette County National Bank of Fayetteville did below-average on Bankrate's test of earnings, achieving a score of 14 out of a possible 30.

One key way to measure a bank's earnings is return on equity, calculated by dividing net income (profit, basically) by the total amount of equity. The Fayette County National Bank of Fayetteville's most recent annualized quarterly return on equity was 6.03 percent, below the national average of 8.10 percent.

The bank reported net income of $660,000 on total equity of $10.8 million for the twelve months ended December 31, 2017. The bank experienced an annualized return on average assets, or ROA, of 0.72 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.