Safe and Sound

Bank of New Hampshire

Laconia, NH
4
Star Rating
Bank of New Hampshire is a Laconia, NH-based, FDIC-insured bank that opened its doors in 1831. The bank has equity of $149.5 million on assets of $1.51 billion, according to June 30, 2017, regulatory filings.

U.S. bank customers have $1.19 billion on deposit at 25 offices in NH run by 300 full-time employees. With that footprint, the bank has amassed loans and leases worth $1.04 billion, including $893.5 million worth of real estate loans.

Overall, Bankrate believes that, as of June 30, 2017, Bank of New Hampshire exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Here's a breakdown of how the bank faired on the three key criteria Bankrate used to score U.S. banks.

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THE INSTITUTION'S SCORE

Capital Score

Capital is a crucial measurement of an institution's financial resilience. It acts as a bulwark against losses and affords protection for depositors when a bank is experiencing economic trouble. From a safety and soundness perspective, more capital is preferred.
Bank of New Hampshire scored below the national average of 13.38 on our test to measure the adequacy of a bank's capital, receiving a score of 8 out of a possible 30 points.

One way to measure this buffer is looking at a bank's Tier 1 capital ratio. Bank of New Hampshire's Tier 1 capital ratio was 11.98 percent, exceeding the 6 percent level regulators consider adequate, but below the national average of 25.16 percent. The higher the capital ratio, the better the bank will be able to stand up to economic challenges.

Overall, Bank of New Hampshire held equity amounting to 9.87 percent of its assets, which was lower than the national average of 12.10 percent.

Asset Quality Score

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

A bank with extensive holdings of these types of assets may eventually be required to use capital to absorb losses, diminishing its equity buffer. It also means that there are likely to be many assets that are in non-accrual status and no longer earning money, diminishing earnings and elevating the chances of a failure in the future.

On Bankrate's asset quality test, Bank of New Hampshire scored 40 out of a possible 40 points, better than the national average of 37.62 points.

The percentage of problem assets a bank holds compared to its total assets is a handy indicator of asset quality.As of June 30, 2017, 0.30 percent of Bank of New Hampshire'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 1.04 percent.

Banks maintain a reserve to handle troubled assets known as an "allowance for loan and lease losses." Comparing the that reserve's size 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 Bank of New Hampshire's loan loss allowance in its most recent filings.

Earnings score

How profitable a bank is affects its long-term survivability. Earnings may be retained by the bank, boosting its capital cushion, or be used to deal with problematic loans, likely making the bank more resilient in tough times. However, banks that are losing money have less ability to do those things.

Bank of New Hampshire scored 10 out of a possible 30 on Bankrate's test of earnings, falling short of the national average of 16.52.

One widely used way to measure a bank's earnings is return on equity, or net income (profit, essentially) divided by the total amount of equity. The most recent annualized quarterly return on equity for Bank of New Hampshire was 4.37 percent, below the national average of 9.28 percent.

The bank earned net income of $3.2 million on total equity of $149.5 million for the twelve months ended June 30, 2017. The bank experienced an annualized return on average assets, or ROA, of 0.44 percent, below the 1 percent deemed satisfactory in accordance with industry standards and below the average for U.S. banks of 1.14 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.