Safe and Sound

The National Bank of Malvern

Malvern, PA
4
Star Rating
The National Bank of Malvern is a Malvern, PA-based, FDIC-insured bank founded in 1884. As of December 31, 2017, the bank had equity of $22.6 million on $152.1 million in assets.

Thanks to the efforts of 25 full-time employees in 2 offices in PA, the bank currently holds loans and leases worth $111.3 million, including $108.7 million worth of real estate loans. The bank currently holds $127.0 million in deposits from U.S. customers.

Overall, Bankrate believes that, as of December 31, 2017, The National Bank of Malvern exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Keep reading for a look at how the bank fared on the three important criteria Bankrate used to score U.S. banks.

WHAT IS
SAFE AND SOUND?

Find out

THE INSTITUTION'S SCORE

Capital Score

Capital is a crucial measurement of an institution's financial strength. It acts as a bulwark against losses and provides protection for accountholders when a bank is struggling financially. When looking at safety and soundness, more capital is preferred.

On our test to measure the adequacy of a bank's capital, The National Bank of Malvern racked up 20 out of a possible 30 points, above the national average of 13.13.

A bank's Tier 1 capital ratio is an essential measure of this buffer. The National Bank of Malvern's Tier 1 capital ratio was 19.99 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 headwinds.

Overall, The National Bank of Malvern held equity amounting to 14.85 percent of its assets, which exceeded the national average of 12.03 percent.

Asset Quality Score

In this test, Bankrate tries to determine the impact of troubled assets, such as past-due loans, on the bank's loan loss reserves and overall capitalization.

Having lots of these types of assets means a bank may have to use capital to absorb losses, cutting down on its cushion of equity. It also means that there are likely to be many assets that are in non-accrual status and no longer earning interest for the bank, diminishing earnings and increasing the chances of a failure in the future.

The National Bank of Malvern scored 32 out of a possible 40 points on Bankrate's asset quality test, less than the national average of 37.49.

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, 3.20 percent of The National Bank of Malvern's loans were noncurrent -- in other words, they were more than 90 days past due or were in non-accrual status. That's above 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 . Comparing how large that reserve is to the total amount of problematic loans can be a helpful indicator when evaluating a bank's ability to manage problem assets. Unfortunately, the FDIC did not provide information on The National Bank of Malvern's loan loss allowance in its most recent filings.

Earnings score

A bank's profitability has an effect on its long-term survivability. Earnings may be retained by the bank, increasing its capital cushion, or be used to deal with problematic loans, potentially making the bank more resilient in times of trouble. However, banks that are losing money are less able to do those things.

The National Bank of Malvern received below-average marks on Bankrate's test of earnings, achieving a score of 8 out of a possible 30.

One key way to measure a bank's earnings is return on equity, calculated by dividing net income (profit, basically) by the total amount of equity. The most recent annualized quarterly return on equity for The National Bank of Malvern was 3.53 percent, below the national average of 8.10 percent.

For the twelve months ended December 31, 2017, the bank earned net income of $807,000 on total equity of $22.6 million. The bank had an annualized return on average assets, or ROA, of 0.53 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.