Safe and Sound

Grand Bank, National Association

Hamilton, NJ
2
Star Rating
Founded in 2002, Grand Bank, National Association is an FDIC-insured bank based in Hamilton, NJ. As of December 31, 2017, the bank had equity of $21.4 million on assets of $215.2 million.

U.S. bank customers have $188.5 million on deposit at 2 offices in NJ run by 34 full-time employees. With that footprint, the bank holds loans and leases worth $172.6 million, including $147.3 million worth of real estate loans.

Overall, Bankrate believes that, as of December 31, 2017, Grand Bank, National Association exhibited a below-average condition, earning 2 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 evaluate American banks.

WHAT IS
SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

Capital acts as a bulwark against losses and affords protection for account holders when a bank is struggling financially. It follows then that when it comes to measuring an a bank's financial stability, capital is essential. When looking at safety and soundness, the more capital, the better.

Grand Bank, National Association came in below the national average of 13.13 on our test to measure the adequacy of a bank's capital, racking up 10 out of a possible 30 points.

One way to measure this buffer is looking at a bank's Tier 1 capital ratio. Grand Bank, National Association's Tier 1 capital ratio was 12.25 percent, above the 6 percent level regulators consider adequate, but lower than the national average of 25.65 percent. The higher the capital ratio, the better the bank will be able to weather economic downturns.

Overall, Grand Bank, National Association held equity amounting to 9.95 percent of its assets, which was lower than the national average of 12.03 percent.

Asset Quality Score

This test is intended to estimate how the bank's loan loss reserves and overall capitalization could be affected by problem assets, such as past-due loans.

Having lots of these kinds of assets could eventually force a bank to use capital to cover losses, diminishing 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, decreasing earnings and elevating the risk of a failure in the future.

On Bankrate's asset quality test, Grand Bank, National Association scored 24 out of a possible 40 points, lower than the national average of 37.49 points.

A useful indicator of asset quality is the percentage of problem assets a bank holds compared to its total assets. As of December 31, 2017, 2.84 percent of Grand Bank, National Association's loans were noncurrent, meaning 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 to deal with troubled assets known as an "allowance for loan and lease losses." That reserve's size can be a widely used indicator when evaluating a bank's ability to manage troubled assets, especially when compared to the total amount of problem loans. Unfortunately, the FDIC did not provide information on Grand Bank, National 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, increasing its capital cushion, or use them to address problematic loans, potentially making the bank better prepared to withstand economic trouble. However, banks that are losing money have less ability to do those things.

On Bankrate's earnings test, Grand Bank, National Association scored 6 out of a possible 30, coming in below the national average of 15.12.

Return on equity, calculated by dividing net income (profit, basically) by total equity, is one important way to measure a bank's earnings. Grand Bank, National Association's most recent annualized quarterly return on equity was 2.73 percent, below the national average of 8.10 percent.

The bank earned net income of $553,000 on total equity of $21.4 million for the twelve months ended December 31, 2017. The bank had an annualized return on average assets, or ROA, of 0.26 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.