Safe and Sound

First Hope Bank, A National Banking Association

Hope, NJ
4
Star Rating
Started in 1911, First Hope Bank, A National Banking Association is an FDIC-insured bank based in Hope, NJ. As of June 30, 2017, the bank had equity of $43.1 million on assets of $497.1 million.

Thanks to the work of 117 full-time employees in 6 offices in NJ, the bank has amassed loans and leases worth $325.9 million, including $302.4 million worth of real estate loans. U.S. bank customers currently have $431.8 million in deposits with the bank.

Overall, Bankrate believes that, as of June 30, 2017, First Hope Bank, A National Banking Association exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Here's a look at how the bank did on the three important criteria Bankrate used to evaluate U.S. banks.

WHAT IS
SAFE AND SOUND?

Find out

THE INSTITUTION'S SCORE

Capital Score

When it comes to measuring an a bank's financial fortitude, capital is valuable. It works as a bulwark against losses and as protection for accountholders when a bank is struggling financially. When it comes to safety and soundness, the more capital, the better.
First Hope Bank, A National Banking Association fell short of 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. First Hope Bank, A National Banking Association's Tier 1 capital ratio was 11.59 percent, higher than the 6 percent level regulators consider adequate, but less than the national average of 25.16 percent. A higher capital ratio means the bank will be better able to weather economic difficulties.

Overall, First Hope Bank, A National Banking Association held equity amounting to 8.68 percent of its assets, which was lower than the national average of 12.10 percent.

Asset Quality Score

Bankrate uses this test to determine the effect of problem assets, such as past-due loans, on the bank's capitalization and allocated loan loss reserves.

A bank with extensive holdings of these kinds of assets may eventually be forced to use capital to cover losses, shrinking its buffer of equity. Many of those assets are also likely to be in non-accrual status and thus aren't earning interest for the bank, reducing earnings and increasing the risk of a failure in the future.

On Bankrate's asset quality test, First Hope Bank, A National Banking Association scored 36 out of a possible 40 points, failing to reach the national average of 37.62 points.

The percentage of problem assets a bank holds compared to its total assets is a widely used indicator of asset quality.As of June 30, 2017, 1.50 percent of First Hope Bank, A National Banking Association'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 1.04 percent.

Banks maintain a reserve known as an "allowance for loan and lease losses" to deal with troubled assets . Comparing the the size of that reserve to the total amount of problematic loans can be a useful indicator when evaluating a bank's ability to manage troubled assets. Unfortunately, the FDIC did not provide information on First Hope Bank, A National Banking Association's loan loss allowance in its most recent filings.

Earnings score

How profitable a bank is affects its long-term survivability. A bank can retain its earnings, boosting its capital cushion, or use them to address problematic loans, likely making the bank more resilient in times of trouble. Conversely, losses lessen a bank's ability to do those things.

On Bankrate's test of earnings, First Hope Bank, A National Banking Association scored 12 out of a possible 30, lower than the national average of 16.52.

Return on equity, calculated by dividing net income (profit, essentially) by the total amount of equity, is one important measure of a bank's earnings. The most recent annualized quarterly return on equity for First Hope Bank, A National Banking Association was 5.28 percent, below the national average of 9.28 percent.

For the twelve months ended June 30, 2017, the bank reported net income of $1.1 million on total equity of $43.1 million. The bank had an annualized return on average assets, or ROA, of 0.45 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.