Safe and Sound

Phoenixville Federal Bank and Trust

Phoenixville, PA
4
Star Rating
Phoenixville Federal Bank and Trust is a Phoenixville, PA-based, FDIC-insured bank started in 1911. As of December 31, 2017, the bank had equity of $50.5 million on $437.4 million in assets.

Thanks to the efforts of 79 full-time employees in 7 offices in PA, the bank holds loans and leases worth $307.9 million, including real estate loans of $295.2 million. U.S. bank customers currently have $384.9 million in deposits with the bank.

Overall, Bankrate believes that, as of December 31, 2017, Phoenixville Federal Bank and Trust exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Keep reading for a look at how the bank did on the three important criteria Bankrate used to grade American banks.

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THE INSTITUTION'S SCORE

Capital Score

Capital is a key measurement of an institution's financial strength. It acts as a bulwark against losses and as protection for depositors during times of economic instability for the bank. When looking at safety and soundness, the more capital, the better.

On our test to measure capital adequacy, Phoenixville Federal Bank and Trust racked up 14 out of a possible 30 points, above the national average of 13.13.

One widely used measure of this buffer is a bank's Tier 1 capital ratio. Phoenixville Federal Bank and Trust's Tier 1 capital ratio was 17.32 percent, above the 6 percent level considered adequate by regulators, but less than the national average of 25.65 percent. The higher the capital ratio, the better the bank will be able to weather economic challenges.

Overall, Phoenixville Federal Bank and Trust held equity amounting to 11.55 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 impact of troubled assets, such as unpaid loans, on the bank's capitalization and allocated loan loss reserves.

Having lots of these kinds of assets suggests a bank could have to use capital to absorb losses, decreasing its buffer of equity. Many of those assets are also likely to be in non-accrual status and thus aren't earning money, resulting in depressed earnings and potentially more risk of a failure in the future.

Phoenixville Federal Bank and Trust exceeded the national average of 37.49 on Bankrate's test of asset quality, racking up 40 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, 0.64 percent of Phoenixville Federal Bank and Trust's loans were noncurrent, meaning 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 maintain a reserve known as an "allowance for loan and lease losses" to deal with troubled assets . Comparing 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 problem assets. Unfortunately, the FDIC did not provide information on Phoenixville Federal Bank and Trust's loan loss allowance in its most recent filings.

Earnings score

A bank's profitability affects its long-term survivability. A bank can retain its earnings, expanding its capital cushion, or use them to address problematic loans, likely making the bank better able to withstand economic shocks. Obviously, banks that are losing money are less able to do those things.

Phoenixville Federal Bank and Trust did below-average on Bankrate's test of earnings, achieving a score of 2 out of a possible 30.

One widely used way to measure a bank's earnings is return on equity, calculated by dividing net income (profit, essentially) by the total amount of equity. Phoenixville Federal Bank and Trust's most recent annualized quarterly return on equity was 0.18 percent, below the national average of 8.10 percent.

For the twelve months ended December 31, 2017, the bank reported net income of $92,000 on total equity of $50.5 million. The bank had an annualized return on average assets, or ROA, of 0.02 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.