Safe and Sound

First Hope Bank, A National Banking Association

Hope, NJ
3
Star Rating
First Hope Bank, A National Banking Association is a Hope, NJ-based, FDIC-insured bank dating back to 1911. The bank has equity of $42.7 million on assets of $522.9 million, according to December 31, 2017, regulatory filings.

U.S. bank customers have $453.6 million on deposit at 6 offices in NJ run by 112 full-time employees. With that footprint, the bank holds loans and leases worth $328.0 million, including real estate loans of $306.7 million.

Overall, Bankrate believes that, as of December 31, 2017, First Hope Bank, A National Banking Association exhibited a generally satisfactory condition, earning 3 out of 5 stars for safety and soundness. Keep reading for a look at how the bank fared on the three major criteria Bankrate used to score U.S. banks.

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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 provides protection for accountholders when a bank is experiencing economic instability. When looking at safety and soundness, more capital is preferred.

On our test to measure the adequacy of a bank's capital, First Hope Bank, A National Banking Association received a score of 8 out of a possible 30 points, coming in below the national average of 13.13.

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 11.60 percent, exceeding the 6 percent level regulators consider adequate, but under the national average of 25.65 percent. The higher the capital ratio, the better the bank will be able to weather financial headwinds.

Overall, First Hope Bank, A National Banking Association held equity amounting to 8.17 percent of its assets, which was lower than the national average of 12.03 percent.

Asset Quality Score

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

A bank with lots of these kinds of assets may eventually be forced to use capital to absorb losses, reducing its buffer of equity. Many of those assets are also likely to be in non-accrual status and no longer earning money, resulting in diminished earnings and potentially more risk of a future failure.

First Hope Bank, A National Banking Association scored 36 out of a possible 40 points on Bankrate's asset quality test, below the national average of 37.49.

A widely used indicator of asset quality is the percentage of problem assets a bank holds compared to its total assets. As of December 31, 2017, 1.29 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 1.01 percent.

Banks keep a reserve known as an "allowance for loan and lease losses" to deal with troubled assets . Comparing the size of that reserve to the total amount of at-risk 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

A bank's ability to earn money has an effect on its long-term survivability. A bank can retain its earnings, boosting its capital cushion, or put them to work addressing problematic loans, potentially making the bank more resilient in times of trouble. Obviously, banks that are losing money have less ability to do those things.

First Hope Bank, A National Banking Association received below-average marks on Bankrate's earnings test, achieving a score of 8 out of a possible 30.

One key way to measure a bank's earnings is return on equity, or net income (profit, basically) divided by the total amount of equity. The most recent annualized quarterly return on equity for First Hope Bank, A National Banking Association was 3.43 percent, below the national average of 8.10 percent.

The bank earned net income of $1.5 million on total equity of $42.7 million for the twelve months ended December 31, 2017. The bank reported an annualized return on average assets, or ROA, of 0.29 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.