Safe and Sound

Lee Bank

Lee, MA
3
Star Rating
Lee Bank is a Lee, MA-based, FDIC-insured bank dating back to 1992. Regulatory filings show the bank having equity of $29.9 million on $348.6 million in assets, as of December 31, 2017.

U.S. bank customers have $243.3 million on deposit at 5 offices in MA run by 72 full-time employees. With that footprint, the bank holds loans and leases worth $286.8 million, $267.9 million of which are for real estate.

Overall, Bankrate believes that, as of December 31, 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 fared on the three key criteria Bankrate used to score U.S. banks.

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THE INSTITUTION'S SCORE

Capital Score

Capital works as a buffer against losses and as protection for depositors during periods of economic trouble for the bank. Therefore, when it comes to measuring an an institution's financial fortitude, capital is crucial. When it comes to safety and soundness, the higher the 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, below the national average of 13.13.

One way to measure this buffer is looking at a bank's Tier 1 capital ratio. Lee Bank's Tier 1 capital ratio was 11.45 percent, exceeding 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 stand up to economic difficulties.

Overall, Lee Bank held equity amounting to 8.59 percent of its assets, which was lower than the national average of 12.03 percent.

Asset Quality Score

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

Having large numbers of these kinds of assets may eventually require a bank to use capital to cover losses, reducing its equity buffer. 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 future failure.

On Bankrate's test of asset quality, Lee Bank scored 32 out of a possible 40 points, coming in below the national average of 37.49 points.

The percentage of problem assets a bank holds compared to its total assets is a handy indicator of asset quality.As of December 31, 2017, 1.57 percent of Lee Bank'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 maintain a reserve known as an "allowance for loan and lease losses" to deal with problem assets . Comparing how large that reserve is to the total amount of problem loans can be a helpful indicator when evaluating a bank's ability to manage troubled assets. Unfortunately, the FDIC did not provide information on Lee Bank'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, likely making the bank better able to withstand economic trouble. Banks that are losing money, however, are less able to do those things.

On Bankrate's test of earnings, Lee Bank scored 6 out of a possible 30, lower than the national average of 15.12.

Return on equity, calculated by dividing net income (profit, essentially) by the total amount of equity, is one important way to measure a bank's earnings. Lee Bank's most recent annualized quarterly return on equity was 2.69 percent, below the national average of 8.10 percent.

For the twelve months ended December 31, 2017, the bank reported net income of $789,000 on total equity of $29.9 million. The bank had an annualized return on average assets, or ROA, of 0.23 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.