Safe and Sound

The Ephrata National Bank

Ephrata, PA
4
Star Rating
The Ephrata National Bank is an FDIC-insured bank founded in 1881 and currently headquartered in Ephrata, PA. As of December 31, 2017, the bank held equity of $98.2 million on $1.03 billion in assets.

Thanks to the work of 268 full-time employees in 17 offices in PA, the bank has amassed loans and leases worth $592.2 million, $514.1 million of which are for real estate. U.S. bank customers currently have $867.6 million in deposits with the bank.

Overall, Bankrate believes that, as of December 31, 2017, The Ephrata National Bank exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Keep reading for a breakdown of how the bank fared on the three major criteria Bankrate used to grade American banks.

WHAT IS
SAFE AND SOUND?

Find out

THE INSTITUTION'S SCORE

Capital Score

When it comes to measuring an an institution's financial stability, capital is crucial. It works as a bulwark against losses and as protection for accountholders when a bank is struggling financially. When looking at safety and soundness, more capital is better.

The Ephrata National Bank fell short of the national average of 13.13 on our test to measure the adequacy of a bank's capital, racking up 10 out of a possible 30 points.

One widely followed measure of this buffer is a bank's Tier 1 capital ratio. The Ephrata National Bank's Tier 1 capital ratio was 13.63 percent, higher than the 6 percent level regulators consider adequate, but below the national average of 25.65 percent. A higher capital ratio suggests the bank will be better able to stand up to economic difficulties.

Overall, The Ephrata National Bank held equity amounting to 9.50 percent of its assets, which was lower than the national average of 12.03 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 problem assets, such as unpaid loans.

Having large numbers of these types of assets means a bank could eventually have to use capital to cover losses, cutting down on its buffer of equity. Many of those assets are also likely to be in non-accrual status and no longer earning money, decreasing earnings and elevating the risk of a future failure.

On Bankrate's test of asset quality, The Ephrata National Bank scored 40 out of a possible 40 points, beating out the national average of 37.49 points.

A useful indicator of asset quality is the percentage of problem assets a bank holds compared to its total assets. As of December 31, 2017, 0.14 percent of The Ephrata National 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 maintain a reserve known as an "allowance for loan and lease losses" to deal with problem assets . Comparing the reserve's size to the total amount of at-risk loans can be a handy indicator when evaluating a bank's ability to manage troubled assets. Unfortunately, the FDIC did not provide information on The Ephrata National 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 can be retained by the bank, increasing its capital buffer, or be used to address problematic loans, potentially making the bank better prepared to withstand economic shocks. Losses, on the other hand, lessen a bank's ability to do those things.

On Bankrate's test of earnings, The Ephrata National Bank scored 14 out of a possible 30, lower than the national average of 15.12.

One widely used way to measure a bank's earnings is return on equity, calculated by dividing net income (essentially profit) by total equity. The Ephrata National Bank's most recent annualized quarterly return on equity was 6.63 percent, below the national average of 8.10 percent.

For the twelve months ended December 31, 2017, the bank recorded net income of $6.4 million on total equity of $98.2 million. The bank reported an annualized return on average assets, or ROA, of 0.64 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.