Safe and Sound

Univest Bank and Trust Co.

Souderton, PA
4
Star Rating
Founded in 1876, Univest Bank and Trust Co. is an FDIC-insured bank headquartered in Souderton, PA. The bank has equity of $600.6 million on assets of $4.42 billion, according to June 30, 2017, regulatory filings.

With 755 full-time employees in 48 offices in multiple states, the bank has amassed loans and leases worth $3.49 billion, including real estate loans of $2.32 billion. U.S. bank customers currently have $3.35 billion in deposits with the bank.

Overall, Bankrate believes that, as of June 30, 2017, Univest Bank and Trust Co. exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Keep reading for a breakdown of how the bank faired 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 works as a bulwark against losses and as protection for accountholders when a bank is experiencing financial trouble. It follows then that when it comes to measuring an a bank's financial resilience, capital is key. From a safety and soundness perspective, the more capital, the better.
On our test to measure the adequacy of a bank's capital, Univest Bank and Trust Co. received a score of 10 out of a possible 30 points, falling short of the national average of 13.38.

A bank's Tier 1 capital ratio is a widely used measure of this buffer. Univest Bank and Trust Co.'s Tier 1 capital ratio was 10.95 percent, exceeding the 6 percent level regulators consider adequate, but lower than the national average of 25.16 percent. The higher the capital ratio, the better the bank will be able to weather economic challenges.

Overall, Univest Bank and Trust Co. held equity amounting to 13.57 percent of its assets, which exceeded the national average of 12.10 percent.

Asset Quality Score

This test is intended to try to understand how the bank's capitalization and allocated loan loss reserves could be affected by troubled assets, such as past-due loans.

A bank with extensive holdings of these types of assets could eventually be forced to use capital to cover losses, decreasing its equity buffer. Many of those assets are also likely to be in non-accrual status and thus aren't earning interest for the bank, diminishing earnings and elevating the risk of a failure in the future.

Univest Bank and Trust Co. exceeded the national average of 37.62 on Bankrate's test of asset quality, racking up 40 out of a possible 40 points .

A useful indicator of asset quality is the percentage of problem assets a bank holds compared to its total assets. As of June 30, 2017, 0.78 percent of Univest Bank and Trust Co.'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 1.04 percent.

Banks keep a reserve known as an "allowance for loan and lease losses" to deal with troubled assets . Comparing the how large that reserve is to the total amount of problematic loans can be a widely used indicator when evaluating a bank's ability to manage troubled assets. Unfortunately, the FDIC did not provide information on Univest Bank and Trust Co.'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, increasing its capital buffer, or use them to deal with problematic loans, likely making the bank more resilient in times of trouble. Banks that are losing money, however, have less ability to do those things.

Univest Bank and Trust Co. exceeded the national average on Bankrate's earnings test, achieving a score of 18 out of a possible 30.

Return on equity, calculated by dividing net income (profit, basically) by the total amount of equity, is one key measure of a bank's earnings. The most recent annualized quarterly return on equity for Univest Bank and Trust Co. was 8.31 percent, below the national average of 9.28 percent.

For the twelve months ended June 30, 2017, the bank earned net income of $24.6 million on total equity of $600.6 million. The bank reported an annualized return on average assets, or ROA, of 1.15 percent, above the 1 percent deemed satisfactory in accordance with industry standards, and above the average for U.S. banks of 1.14 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.