Safe and Sound

Haverhill Bank

Haverhill, MA
4
Star Rating
Founded in 1877, Haverhill Bank is an FDIC-insured bank based in Haverhill, MA. Regulatory filings show the bank having equity of $39.1 million on assets of $387.8 million, as of June 30, 2017.

With 67 full-time employees in 9 offices in multiple states, the bank currently holds loans and leases worth $276.5 million, including real estate loans of $249.5 million. U.S. bank customers currently have $334.4 million in deposits with the bank.

Overall, Bankrate believes that, as of June 30, 2017, Haverhill Bank exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Keep reading for an analysis of how the bank did on the three major criteria Bankrate used to evaluate American banks.

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THE INSTITUTION'S SCORE

Capital Score

Capital works as a buffer against losses and as protection for accountholders during times of financial trouble for the bank. It follows then that when it comes to measuring an an institution's financial stability, capital is key. When it comes to safety and soundness, the higher the capital, the better.
Haverhill Bank fell short of the national average of 13.38 on our test to measure the adequacy of a bank's capital, racking up 12 out of a possible 30 points.

A bank's Tier 1 capital ratio is a commonly used measure of this buffer. Haverhill Bank's Tier 1 capital ratio was 15.90 percent, above the 6 percent level regulators consider adequate, but under the national average of 25.16 percent. The higher the capital ratio, the better the bank will be able to weather financial difficulties.

Overall, Haverhill Bank held equity amounting to 10.09 percent of its assets, which was lower than the national average of 12.10 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 capitalization and allocated loan loss reserves.

A bank with large numbers of these kinds of assets may eventually have to use capital to absorb losses, shrinking its cushion of equity. Many of those assets are also likely to be in non-accrual status and thus aren't earning money, decreasing earnings and increasing the risk of a future failure.

Haverhill Bank scored 40 out of a possible 40 points on Bankrate's asset quality test, beating out the national average of 37.62.

The percentage of problem assets a bank holds compared to its total assets is a useful indicator of asset quality.As of June 30, 2017, 0.14 percent of Haverhill Bank'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 1.04 percent.

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

Earnings score

A bank's ability to earn money affects its long-term survivability. A bank can retain its earnings, expanding its capital cushion, or put them to work addressing problematic loans, likely making the bank more resilient in times of trouble. However, banks that are losing money are less able to do those things.

Haverhill Bank fell short of the national average on Bankrate's test of earnings, achieving a score of 8 out of a possible 30.

Return on equity, calculated by dividing net income (profit, essentially) by total equity, is one important way to measure a bank's earnings. Haverhill Bank's most recent annualized quarterly return on equity was 3.64 percent, below the national average of 9.28 percent.

The bank recorded net income of $703,000 on total equity of $39.1 million for the twelve months ended June 30, 2017. The bank experienced an annualized return on average assets, or ROA, of 0.37 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.