Safe and Sound

Institution for Savings in Newburyport and Its Vicinity

Newburyport, MA
5
Star Rating
Institution for Savings in Newburyport and Its Vicinity is a Newburyport, MA-based, FDIC-insured bank founded in 1820. Regulatory filings show the bank having equity of $331.4 million on assets of $3.30 billion, as of December 31, 2017.

Thanks to the efforts of 202 full-time employees in 15 offices in MA, the bank currently holds loans and leases worth $2.51 billion, including real estate loans of $2.50 billion. The bank currently holds $2.67 billion in deposits from U.S. customers.

Overall, Bankrate believes that, as of December 31, 2017, Institution for Savings in Newburyport and Its Vicinity exhibited a superior condition, earning a full 5 stars for safety and soundness. Here's a look at how the bank fared on the three important criteria Bankrate used to score U.S. banks on safety and soundness.

WHAT IS
SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

Capital is an important measurement of an institution's financial fortitude. It acts as a bulwark against losses and affords protection for accountholders when a bank is experiencing economic trouble. From a safety and soundness perspective, the more capital, the better.

Institution for Savings in Newburyport and Its Vicinity fell below the national average of 13.13 on our test to measure capital adequacy, scoring 10 out of a possible 30 points.

A bank's Tier 1 capital ratio is a widely followed measure of this buffer. Institution for Savings in Newburyport and Its Vicinity's Tier 1 capital ratio was 12.12 percent, higher than the 6 percent level considered adequate by regulators, 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 difficulties.

Overall, Institution for Savings in Newburyport and Its Vicinity held equity amounting to 10.04 percent of its assets, which was lower than the national average of 12.03 percent.

Asset Quality Score

This test's purpose is to try to understand how the bank's capitalization and allocated loan loss reserves could be affected by problem assets, such as unpaid loans.

A bank with lots of these types of assets may eventually have to use capital to absorb losses, shrinking its equity cushion. It also means that there are likely to be many assets that are in non-accrual status and thus aren't earning interest for the bank, resulting in depressed earnings and potentially more risk of a failure in the future.

Institution for Savings in Newburyport and Its Vicinity scored 40 out of a possible 40 points on Bankrate's asset quality test, above the national average of 37.49.

A helpful indicator of asset quality is the percentage of problem assets a bank holds compared to its total assets. As of December 31, 2017, 0.22 percent of Institution for Savings in Newburyport and Its Vicinity'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 1.01 percent.

Banks maintain a reserve known as an "allowance for loan and lease losses" to deal with troubled assets . Comparing the reserve's size 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 Institution for Savings in Newburyport and Its Vicinity's loan loss allowance in its most recent filings.

Earnings score

How profitable a bank is affects its long-term survivability. Earnings may be retained by the bank, expanding its capital buffer, or be used to deal with problematic loans, likely making the bank better able to withstand financial shocks. Losses, on the other hand, reduce a bank's ability to do those things.

On Bankrate's earnings test, Institution for Savings in Newburyport and Its Vicinity scored 20 out of a possible 30, exceeding the national average of 15.12.

Return on equity, calculated by dividing net income (profit, essentially) by total equity, is one important way to measure a bank's earnings. The most recent annualized quarterly return on equity for Institution for Savings in Newburyport and Its Vicinity was 12.21 percent, above the national average of 8.10 percent.

For the twelve months ended December 31, 2017, the bank recorded net income of $37.4 million on total equity of $331.4 million. The bank experienced an annualized return on average assets, or ROA, of 1.21 percent, above the 1 percent deemed satisfactory in accordance with industry standards, and above 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.