Safe and Sound

First National Bank of Pennsylvania

Greenville, PA
3
Star Rating
First National Bank of Pennsylvania is a Greenville, PA-based, FDIC-insured bank dating back to 1864. As of December 31, 2017, the bank held equity of $4.55 billion on $31.21 billion in assets.

With 4,278 full-time employees in 424 offices in multiple states, the bank currently holds loans and leases worth $20.76 billion, including real estate loans of $14.76 billion. U.S. bank customers currently have $22.58 billion in deposits with the bank.

Overall, Bankrate believes that, as of December 31, 2017, First National Bank of Pennsylvania exhibited a generally satisfactory condition, earning 3 out of 5 stars for safety and soundness. Here's an analysis of how the bank did on the three key criteria Bankrate used to score American banks.

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THE INSTITUTION'S SCORE

Capital Score

Capital works as a cushion against losses and affords protection for depositors when a bank is experiencing economic trouble. It follows then that when it comes to measuring an an institution's financial resilience, capital is key. From a safety and soundness perspective, the higher the capital, the better.

First National Bank of Pennsylvania scored below the national average of 13.13 on our test to measure the adequacy of a bank's capital, racking up 6 out of a possible 30 points.

One way to measure this buffer is looking at a bank's Tier 1 capital ratio. First National Bank of Pennsylvania's Tier 1 capital ratio was 9.66 percent, above 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 weather economic downturns.

Overall, First National Bank of Pennsylvania held equity amounting to 14.33 percent of its assets, which exceeded the national average of 12.03 percent.

Asset Quality Score

Bankrate uses this test to estimate the effect of problem assets, such as past-due mortgages, on the bank's reserves set aside to cover loan losses, as well as overall capitalization.

Having extensive holdings of these types of assets may eventually require a bank to use capital to cover losses, reducing its equity buffer. Many of those assets are also likely to be in non-accrual status and no longer earning money, reducing earnings and elevating the chances of a failure in the future.

First National Bank of Pennsylvania scored below the national average of 37.49 on Bankrate's asset quality test, racking up 36 out of a possible 40 points .

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, 0.80 percent of First National Bank of Pennsylvania'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 known as an "allowance for loan and lease losses" to deal with troubled assets . How large that reserve is can be a handy indicator when evaluating a bank's ability to manage troubled assets, especially when compared to the total amount of at-risk loans. Unfortunately, the FDIC did not provide information on First National Bank of Pennsylvania's loan loss allowance in its most recent filings.

Earnings score

A bank's earnings performance has an effect on its long-term survivability. Earnings may be retained by the bank, expanding its capital buffer, or be used to deal with problematic loans, potentially making the bank better prepared to withstand financial shocks. Conversely, losses take away from a bank's ability to do those things.

On Bankrate's test of earnings, First National Bank of Pennsylvania scored 10 out of a possible 30, falling short of the national average of 15.12.

One important way to measure a bank's earnings is return on equity, or net income (profit, basically) divided by total equity. First National Bank of Pennsylvania's most recent annualized quarterly return on equity was 5.01 percent, below the national average of 8.10 percent.

The bank recorded net income of $203.9 million on total equity of $4.55 billion for the twelve months ended December 31, 2017. The bank experienced an annualized return on average assets, or ROA, of 0.71 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.