Safe and Sound

Lee Bank

Lee, MA
3
Star Rating
Lee Bank is an FDIC-insured bank started in 1992 and currently based in Lee, MA. The bank has equity of $29.3 million on assets of $344.9 million, according to June 30, 2017, regulatory filings.

Thanks to the work of 74 full-time employees in 5 offices in MA, the bank has amassed loans and leases worth $283.5 million, including real estate loans of $263.0 million. The bank currently holds $247.4 million in deposits from U.S. customers.

Overall, Bankrate believes that, as of June 30, 2017, Lee Bank exhibited a generally satisfactory condition, earning 3 out of 5 stars for safety and soundness. Here's an analysis of how the bank did 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 acts as a buffer against losses and as protection for accountholders when a bank is experiencing economic trouble. Therefore, a bank's level of capital is a key measurement of an institution's financial fortitude. When it comes to safety and soundness, the more capital, the better.
On our test to measure the adequacy of a bank's capital, Lee Bank received a score of 8 out of a possible 30 points, failing to reach the national average of 13.38.

One important measure of this buffer is a bank's Tier 1 capital ratio. Lee Bank's Tier 1 capital ratio was 11.76 percent, above the 6 percent level considered adequate by regulators, but below the national average of 25.16 percent. A higher capital ratio suggests the bank will be better able to weather economic headwinds.

Overall, Lee Bank held equity amounting to 8.50 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 effect of troubled assets, such as unpaid mortgages, on the bank's capitalization and allocated loan loss reserves.

A bank with extensive holdings of these types of assets may eventually have to use capital to absorb losses, cutting down on its equity buffer. Many of those assets are also likely to be in non-accrual status and no longer earning interest for the bank, resulting in lower earnings and potentially more risk of a future failure.

On Bankrate's test of asset quality, Lee Bank scored 32 out of a possible 40 points, lower than the national average of 37.62 points.

A helpful indicator of asset quality is the percentage of problem assets a bank holds compared to its total assets. As of June 30, 2017, 1.68 percent of Lee Bank'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 keep a reserve to deal with troubled assets known as an "allowance for loan and lease losses." Comparing the the size of that reserve to the total amount of problem 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 Lee 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 may be retained by the bank, expanding its capital cushion, or be used to deal with problematic loans, potentially making the bank more resilient in tough times. Obviously, banks that are losing money have less ability to do those things.

Lee Bank scored 14 out of a possible 30 on Bankrate's test of earnings, falling short of the national average of 16.52.

Return on equity, calculated by dividing net income (essentially, profit) by the total amount of equity, is one important measure of a bank's earnings. The most recent annualized quarterly return on equity for Lee Bank was 6.87 percent, below the national average of 9.28 percent.

For the twelve months ended June 30, 2017, the bank recorded net income of $989,000 on total equity of $29.3 million. The bank had an annualized return on average assets, or ROA, of 0.58 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.