Safe and Sound

The Old Fort Banking Company

Old Fort, OH
5
Star Rating
Old Fort, OH-based The Old Fort Banking Company is an FDIC-insured bank started in 1916. Regulatory filings show the bank having equity of $41.6 million on assets of $523.8 million, as of December 31, 2017.

Thanks to the work of 100 full-time employees in 10 offices in OH, the bank currently holds loans and leases worth $311.7 million, including real estate loans of $260.6 million. U.S. bank customers currently have $469.2 million in deposits with the bank.

Overall, Bankrate believes that, as of December 31, 2017, The Old Fort Banking Company exhibited a superior condition, earning a full 5 stars for safety and soundness. Keep reading for an analysis of how the bank did on the three major criteria Bankrate used to evaluate U.S. banks on safety and soundness.

WHAT IS
SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

Capital is a valuable measurement of an institution's financial fortitude. It works as a bulwark against losses and provides protection for accountholders during times of economic trouble for the bank. When it comes to safety and soundness, more capital is better.

The Old Fort Banking Company came in below the national average of 13.13 on our test to measure capital adequacy, racking up 6 out of a possible 30 points.

A bank's Tier 1 capital ratio is a widely used measure of this buffer. The Old Fort Banking Company's Tier 1 capital ratio was 12.35 percent, above the 6 percent level considered adequate by regulators, but under the national average of 25.65 percent. The higher the capital ratio, the better the bank will be able to weather economic headwinds.

Overall, The Old Fort Banking Company held equity amounting to 7.95 percent of its assets, which was lower than 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 mortgages, on the bank's capitalization and allocated loan loss reserves.

Having extensive holdings of these types of assets may eventually force a bank to use capital to cover 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 reduced earnings and potentially more risk of a failure in the future.

The Old Fort Banking Company scored 40 out of a possible 40 points on Bankrate's asset quality test, exceeding the national average of 37.49.

The percentage of problem assets a bank holds compared to its total assets is a useful indicator of asset quality.As of December 31, 2017, 0.04 percent of The Old Fort 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 handle troubled assets known as an "allowance for loan and lease losses." The size of that reserve can be a widely used indicator when evaluating a bank's ability to manage troubled assets, especially when compared to the total amount of at-risk loans. The Old Fort Banking Company's loan loss allowance was 2,680.00 percent of its total noncurrent loans, exceeding the national average. All things being equal, the higher the ratio of loan loss allowance to noncurrent loans, the better.

Earnings score

A bank's ability to earn money has an effect on its safety and soundness. Earnings can be retained by the bank, boosting its capital cushion, or be used to address problematic loans, potentially making the bank better prepared to withstand economic shocks. Conversely, losses diminish a bank's ability to do those things.

The Old Fort Banking Company beat the national average on Bankrate's test of earnings, achieving a score of 26 out of a possible 30.

One important way to measure a bank's earnings is return on equity, or net income (profit, essentially) divided by the total amount of equity. The most recent annualized quarterly return on equity for The Old Fort Banking Company was 16.89 percent, above the national average of 8.10 percent.

For the twelve months ended December 31, 2017, the bank reported net income of $6.9 million on total equity of $41.6 million. The bank had an annualized return on average assets, or ROA, of 1.35 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.