Bank of New Hampshire

[Slickcraft]

BNH has stopped taking applications for any residential, mortgage and consumer loans. See WMUR article. This strikes me as unusual. The CEO states that high origination costs make such loans unprofitable. There must be more to the story.

https://www.wmur.com/article/bank-of...tions/45828789

Alan

[WinnisquamZ]

I am not believing the CEO. No longer writing mortgages and laying off employees in the same article. Call me “chicken little” but, I would quickly move any assets away from them. Many other options are available.
Could they be for sale? Logo change this past summer. Writing no new mortgage debt. Laying off employees. But, building a new office building downtown Laconia. Confusing times.


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[ishoot308]

Originally Posted by Slickcraft

BNH has stopped taking applications for any residential, mortgage and consumer loans. See WMUR article. This strikes me as unusual. The CEO states that high origination costs make such loans unprofitable. There must be more to the story.

https://www.wmur.com/article/bank-of...tions/45828789

Alan

I too would be extremely leery of this as well!...If the bank is no longer doing any more mortgages or any consumer loans as stated, how will they be making money??

Dan

[TheProfessor]

Maybe some financial experts can chime in for perspectives.

As a layman. This does not seem to be enhance views of this bank.
On the surface. The name change and sign changes and all associated with such cost the bank. This huge new building in downtonw Laconia must cost some real monies.

Hope the board of directors are not the same folks that were at Lakes Region Hospital. That went bankrupt.

All could potentially cause a "run" on the bank. Making matters worse.

As with most businesses it is people making decisions. Which could cause success or decline.

Time will tell if the managing people of this bank have made good decisions or less than good.

The FDIC does insure some deposits. So I guess my $700.00 at the bank is safe.

[John Mercier]

BNH is looking at the cost of originating loans.
These aren't loans that they put their own capital or depositors' money behind (being a mutual bank, the depositors are the owners).
They are loans they write for others - like FHA - but have to service (take the payments and transfer them to the FHA/etc). When the costs for the services are greater than the payment for the services; it is a drain on finances.

The best current investments for them are more likely treasuries... and wealth management.

LRGH stopped having large grants gifted to the hospital as charity when the general population became abusive. Concord is also having trouble as it is outside the regional sphere of those charitable donations.

[Descant]

Sounds like they are moving in a direction towards commercial banking, but not marketing the change very well. A lot of retail banking has changed with mortgage applications going online and through brokers like Loan Depot and various credit unions. A lot changed during the pandemic when branches were closed to walk in customers. Even so, mortgages from all sources mostly end up being sold to Fannie/Freddie and rthe customer pays an application fee that should cover expenses. I'm sure we'll hear more over time.

[FlyingScot]

Originally Posted by ishoot308

I too would be extremely leery of this as well!...If the bank is no longer doing any more mortgages or any consumer loans as stated, how will they be making money??

Dan

I do not have knowledge on BNH, but the key word is "originating"--serving potential borrowers who walk in the door one by one, and doing all the credit assessment and mechanical stuff necessary for people to have cash in hand. In doing this, they compete against low overhead mortgage-only lenders. Interestingly, they may still be financing mortgages--they could buy the loans from these mortgage-only lending companies. Other ways to make money would be business loans.

But I agree with your general implication that their purpose as an organization should be doing exactly this kind of thing

[ishoot308]

Originally Posted by FlyingScot

I do not have knowledge on BNH, but the key word is "originating"--serving potential lenders who walk in the door one by one, and doing all the credit assessment and mechanical stuff necessary for people to have cash in hand. In doing this, they compete against low overhead mortgage-only lenders. Interestingly, they may still be financing mortgages--they could buy the loans from these mortgage-only lending companies. Other ways to make money would be business loans.

But I agree with your general implication that their purpose as an organization should be doing exactly this kind of thing

In my opinion, they did a terrible job with this news release….and there will be repercussions.

Dan

[John Mercier]

I don't think they have been doing that many consumer loans, and know that realtors have told me that transactions with mortgages have been way down for a while.

[TiltonBB]

A lot of things in the mortgage lending industry have changed in the last 15 years because of the financial crisis of 2007- 2008. Those changes and recent higher mortgage rates may have affected the profitability of mortgages for the Bank of New Hampshire.

Up until that time, most banks and mortgage brokers originated loans but sold them to major lenders in the secondary market. Major mortgage lenders like GMAC, Bank of America, Washington Mutual Etc. bought the loans from the originating company and compensated them based on the loan amount and rate and term of the loan. That is how mortgage brokers made money, selling their loans to the major lenders.

Smaller banks often held on to the shorter term adjustable rate loans because they were protected, in the event interest rates went up, the loan rate would adjust too. The banks sold most of their 30 year fixed loans to avoid the risk of changing interest rates. Mortgage brokers did not hold on to any mortgages, they were brokers, not lenders.

[John Mercier]

BNH rarely held a mortgage, even when it was LSB. Their interest rates were high and terms not mildly liberal as compared to other options that they would originate loans for.

I have been with them forever and never taken a consumer loan. My mortgage I asked them to keep in-house as a favor... it was a 20 year term five year adjustable with 20 percent down... not something most would opt for.

[bushwack1]

I have been with 'them' formerly, [LACONIA SAVINGS BANK] for over Thirty-five years and on *First Name* relations with their "Long Term Devoted Employees". It has always been a neighborhood themed bank. {Family } I'm not liking this *Corporate America Make Over!* That said I am going to hang in there for a while and see where this **Sh!t Show** is going......... But I am looking for options of other financial agency's that still have that Neighborly, Homey Touch. I may have to look into a a local credit union also. Accepting Your Happy Banking Deposit info Here . Please & Thank You. Happy Banking https://youtu.be/iX_TFkut1PM?si=TzOVIX2MzjUKsmS6

[tis]

Originally Posted by bushwack1

I have been with 'them' formerly, [LACONIA SAVINGS BANK] for over Thirty-five years and on *First Name* relations with their "Long Term Devoted Employees". It has always been a neighborhood themed bank. {Family } I'm not liking this *Corporate America Make Over!* That said I am going to hang in there for a while and see where this **Sh!t Show** is going......... But I am looking for options of other financial agency's that still have that Neighborly, Homey Touch. I may have to look into a a local credit union also. Accepting Your Happy Banking Deposit info Here . Please & Thank You. Happy Banking https://youtu.be/iX_TFkut1PM?si=TzOVIX2MzjUKsmS6

Not much has that neighborly homey touch anymore. When I walk in the bank I have to show my ID and they always want my debit card which I don't have. I don't like the world as it is becoming more and more every day.

[jeffk]

FYI credit unions, I just went to one to check into a car loan. The rates are sky high (they used to have lower rates than others, no longer true) and they as much as told me that I should look elsewhere for better rates. I'm not sure there are any "good" financial places to be for the consumer any more.

[Sue Doe-Nym]

Just a thought: would a HEL have bearable rates?

[secondcurve]

Originally Posted by Slickcraft

BNH has stopped taking applications for any residential, mortgage and consumer loans. See WMUR article. This strikes me as unusual. The CEO states that high origination costs make such loans unprofitable. There must be more to the story.

https://www.wmur.com/article/bank-of...tions/45828789

Alan

Small banks’ margins are getting crushed in the current deposit environment. They have made a lot of fixed rate loans and customers are demanding more on their deposits. Not a good combination. I wonder what this bank’s loan to deposit ratio is? Anything approaching 100% or above is concerning for regulators.

[Biggd]

Originally Posted by secondcurve

Small banks’ margins are getting crushed in the current deposit environment. They have made a lot of fixed rate loans and customers are demanding more on their deposits. Not a good combination. I wonder what this bank’s loan to deposit ratio is? Anything approaching 100% or above is concerning for regulators.

Well, banks cleaned up over the past 20 years of low rates, good times don't last forever. In my area back in Mass a new bank building has cropped up every month over the past 10 years.
I was in the gas station business for many years and many of the owners had prime high traffic locations that were bought up or lease to banks. New bank buildings are everywhere.

[SAMIAM]

Originally Posted by bushwack1

I have been with 'them' formerly, [LACONIA SAVINGS BANK] for over Thirty-five years and on *First Name* relations with their "Long Term Devoted Employees". It has always been a neighborhood themed bank. {Family } I'm not liking this *Corporate America Make Over!* That said I am going to hang in there for a while and see where this **Sh!t Show** is going......... But I am looking for options of other financial agency's that still have that Neighborly, Homey Touch. I may have to look into a a local credit union also. Accepting Your Happy Banking Deposit info Here . Please & Thank You. Happy Banking https://youtu.be/iX_TFkut1PM?si=TzOVIX2MzjUKsmS6

Meredith Village Savings bank.....still a cozy and trustworthy local bank.....love them

[WinterHarborGuy]

Originally Posted by SAMIAM

Meredith Village Savings bank.....still a cozy and trustworthy local bank.....love them

Yes, my experience as well.

[thinkxingu]

Originally Posted by jeffk

FYI credit unions, I just went to one to check into a car loan. The rates are sky high (they used to have lower rates than others, no longer true) and they as much as told me that I should look elsewhere for better rates. I'm not sure there are any "good" financial places to be for the consumer any more.

I have worked with DCU and GSCU since 2007 with great success. Not sure they're in your area but thought I'd mention them.

Sent from my SM-S911U using Tapatalk

[codeman671]

Originally Posted by John Mercier

BNH rarely held a mortgage, even when it was LSB. Their interest rates were high and terms not mildly liberal as compared to other options that they would originate loans for.

I have been with them forever and never taken a consumer loan. My mortgage I asked them to keep in-house as a favor... it was a 20 year term five year adjustable with 20 percent down... not something most would opt for.

On the contrary I have had multiple mortgages with BNH and they kept every one in house. My main home was originated and is still with them. The rates were always competitive and Tammie Mahoney was a pleasure to deal with.

My island home was originated with Meredith Village, who promptly sold it off to Arvest Bank (a Walmart company).

I bank with BNH and will stay with them for now. My local branch in Dover is excellent to work with.

[Descant]

Originally Posted by ishoot308

I too would be extremely leery of this as well!...If the bank is no longer doing any more mortgages or any consumer loans as stated, how will they be making money??

Dan

Banks make money by handling money for others. When you pay a tax bill to a lockbox (e.g. PO Box in Kansas) it goes directlyh to a bank. Many companies manage tgheir receivables this way. When you buy a new furnace and have an "interest free" payment plan, the receivable goes to a "Factor" (bank) who buys the receivable from the furnace guys. Locally, Cambridge Trust does "private banking" and "Wealth management". No teller lines or drive up. Several of their clients are cities and towns who have sizeable capital reserve funds that need a custodian and management. NH Trusts are not subject to the NH Interest and Dividends tax, so they help establish such trusts and manage the related funds. You don't have to be a NH resident to take advantage of this. Lots of things for banks to do that don't require a building on the corner.

[John Mercier]

Originally Posted by codeman671

On the contrary I have had multiple mortgages with BNH and they kept every one in house. My main home was originated and is still with them. The rates were always competitive and Tammie Mahoney was a pleasure to deal with.

My island home was originated with Meredith Village, who promptly sold it off to Arvest Bank (a Walmart company).

I bank with BNH and will stay with them for now. My local branch in Dover is excellent to work with.

You are sure they hold the note?
Because if it doesn't state it in your mortgage documents, they are not required to.

Carroll Stafford - though long ago - made it clear to me that low liquidity, low interest fixed mortgages were not the best investments for a bank.

So my 20 year term adjustable was slightly lower in the interest rate over a 30 year fixed, shorter than a 30 year fixed, and had a much higher down payment than the 5% of recent originated loans.

He explained that regardless, the bank had to make money on the spread with a risk adjustment over a treasury.

[John Mercier]

Originally Posted by secondcurve

Small banks’ margins are getting crushed in the current deposit environment. They have made a lot of fixed rate loans and customers are demanding more on their deposits. Not a good combination. I wonder what this bank’s loan to deposit ratio is? Anything approaching 100% or above is concerning for regulators.

That could be happening if they held onto those mortgages.

[codeman671]

Originally Posted by John Mercier

You are sure they hold the note?
Because if it doesn't state it in your mortgage documents, they are not required to.

Carroll Stafford - though long ago - made it clear to me that low liquidity, low interest fixed mortgages were not the best investments for a bank.

So my 20 year term adjustable was slightly lower in the interest rate over a 30 year fixed, shorter than a 30 year fixed, and had a much higher down payment than the 5% of recent originated loans.

He explained that regardless, the bank had to make money on the spread with a risk adjustment over a treasury.

Yes of course I am positive they hold the note. All of mine have been portfolio loans, not assignable/sellable.

My loan with Meredith Village was not "servicing retained", and got sold immediately.

[John Mercier]

I wonder if they did hold too many in the portfolio.
There is usually that little extra with the interest... but when things reverse like now... it can hurt earnings.

[Descant]

Originally Posted by John Mercier

I wonder if they did hold too many in the portfolio.
There is usually that little extra with the interest... but when things reverse like now... it can hurt earnings.

Sounds possible, and they may not now be able to sell those loans (favorably). However, refusing to take new loans at higher interest rates and acquisition costs, doesn't appear to solve a low income portfolio issue. Waiting to "hear
the rest of the story."

[John Mercier]

As you pointed out... they stated that they would not originate.
They still may be investing.

But they may also be looking to treasuries depending on the risk/reward ratio.

[BroadHopper]

Originally Posted by John Mercier

BNH is looking at the cost of originating loans.
These aren't loans that they put their own capital or depositors' money behind (being a mutual bank, the depositors are the owners).
They are loans they write for others - like FHA - but have to service (take the payments and transfer them to the FHA/etc). When the costs for the services are greater than the payment for the services; it is a drain on finances.

The best current investments for them are more likely treasuries... and wealth management.

As for wealth management, they have an extremely low track record. My uncle deceased and they paid the estate, 725,000. Within months they sold the property for 1.1 million! Plus, the way they handled his liquid assets. 4.25% while I am getting 7% from a credit union!

Then there is my mother-in-law. Same scenario, no wonder they love wealth management!

[John Mercier]

Maybe so.

Thousands of mutual fund managers exist, and some have terrible track records but keep plunking along.

It is lucrative as long as someone chooses to use them.

[Descant]

John is right: "It is lucrative as long as someone chooses to use them." There are a variety of benefits offered by different "wealth management" companies. I have a friend who says if you have a certain amount of assets at BNH you can join their travel club. They have taken several trips around the US and Europe with this group and are very pleased. Sounds like BNH isn't entirely wrong at what they do, but made gaffs in how they announced this recent change of direction.

[John Mercier]

Prestige Plus... age and $25,000.

They offer tiered interest rates for meeting certain marks.
Direct Deposit, Electronic Payment, having a $50k consumer loan, and a wealth management relationship.

Since they are restricting consumer loans, I think that program will have to change.