Safe and Sound

PennCrest Bank

Altoona, PA
4
Star Rating
PennCrest Bank is an FDIC-insured bank started in 1939 and currently based in Altoona, PA. The bank holds equity of $27.5 million on $172.1 million in assets, according to December 31, 2017, regulatory filings.

U.S. bank customers have $140.5 million on deposit at 7 offices in PA run by 46 full-time employees. With that footprint, the bank has amassed loans and leases worth $105.9 million, including real estate loans of $94.8 million.

Overall, Bankrate believes that, as of December 31, 2017, PennCrest Bank 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 major criteria Bankrate used to grade U.S. banks.

WHAT IS
SAFE AND SOUND?

Find out

THE INSTITUTION'S SCORE

Capital Score

Capital works as a bulwark against losses and provides protection for depositors when a bank is experiencing financial instability. Therefore, when it comes to measuring an an institution's financial fortitude, capital is useful. From a safety and soundness perspective, more capital is better.

PennCrest Bank did better than the national average of 13.13 points on our test to measure the adequacy of a bank's capital, scoring 22 out of a possible 30 points.

One commonly used measure of this buffer is a bank's Tier 1 capital ratio. PennCrest Bank's Tier 1 capital ratio was 28.07 percent, exceeding the 6 percent level considered adequate by regulators, and above the national average of 25.65 percent. A higher capital ratio means the bank will be better able to weather economic difficulties.

Overall, PennCrest Bank held equity amounting to 16.00 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 loan loss reserves and overall capitalization could be affected by troubled assets, such as unpaid mortgages.

A bank with a large number of these kinds of assets could eventually be required to use capital to absorb losses, shrinking 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, decreasing earnings and elevating the chances of a failure in the future.

PennCrest Bank scored 40 out of a possible 40 points on Bankrate's test of asset quality, exceeding the national average of 37.49.

The percentage of problem assets a bank holds compared to its total assets is a widely used indicator of asset quality.As of December 31, 2017, 0.74 percent of PennCrest Bank'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 widely used indicator when evaluating a bank's ability to manage problem assets, especially when compared to the total amount of problem loans. Unfortunately, the FDIC did not provide information on PennCrest Bank's loan loss allowance in its most recent filings.

Earnings score

How profitable a bank is has an effect on its long-term survivability. Earnings may be retained by the bank, boosting its capital buffer, or be used to address problematic loans, likely making the bank more resilient in times of trouble. Conversely, losses diminish a bank's ability to do those things.

PennCrest Bank scored 4 out of a possible 30 on Bankrate's earnings test, failing to reach the national average of 15.12.

One widely used measure of a bank's earnings is return on equity, or net income (essentially profit) divided by the total amount of equity. PennCrest Bank's most recent annualized quarterly return on equity was 1.90 percent, below the national average of 8.10 percent.

The bank reported net income of $523,000 on total equity of $27.5 million for the twelve months ended December 31, 2017. The bank experienced an annualized return on average assets, or ROA, of 0.30 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.