Safe and Sound

American Eagle Bank

South Elgin, IL
5
Star Rating
American Eagle Bank is an FDIC-insured bank founded in 2002 and currently based in South Elgin, IL. Regulatory filings show the bank having equity of $18.1 million on assets of $200.2 million, as of June 30, 2017.

With 28 full-time employees, the bank holds loans and leases worth $172.0 million, including real estate loans of $65.8 million. U.S. bank customers currently have $177.9 million in deposits with the bank.

Overall, Bankrate believes that, as of June 30, 2017, American Eagle Bank exhibited a superior condition, earning a full 5 stars for safety and soundness. Here's a breakdown of how the bank did on the three important criteria Bankrate used to evaluate American banks on safety and soundness.

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THE INSTITUTION'S SCORE

Capital Score

When it comes to measuring an a bank's financial strength, capital is important. It acts as a bulwark against losses and as protection for accountholders when a bank is experiencing economic instability. When looking at safety and soundness, the higher the capital, the better.
American Eagle Bank received a score of 10 out of a possible 30 points on our test to measure the adequacy of a bank's capital, less than the national average of 13.38.

One essential measure of this buffer is a bank's Tier 1 capital ratio. American Eagle Bank's Tier 1 capital ratio was 10.37 percent, above the 6 percent level regulators consider adequate, but lower than the national average of 25.16 percent. A higher capital ratio means the bank will be better able to stand up to financial challenges.

Overall, American Eagle Bank held equity amounting to 9.06 percent of its assets, which was lower than the national average of 12.10 percent.

Asset Quality Score

In this test, Bankrate tries to estimate the impact of problem assets, such as past-due loans, on the bank's reserves set aside to cover loan losses, as well as overall capitalization.

A bank with lots of these types of assets could eventually be forced to use capital to cover losses, cutting down on its buffer of equity. 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.

American Eagle Bank scored 40 out of a possible 40 points on Bankrate's asset quality test, above the national average of 37.62.

A useful indicator of asset quality is the percentage of problem assets a bank holds compared to its total assets. As of June 30, 2017, 0.06 percent of American Eagle Bank'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 1.04 percent.

Banks keep a reserve to handle problem assets known as an "allowance for loan and lease losses." Comparing the that reserve's size to the total amount of problem loans can be a helpful indicator when evaluating a bank's ability to manage problem assets. American Eagle Bank's loan loss allowance was 1,009.00 percent of its total noncurrent loans, higher than the national average. All things being equal, the higher the ratio of loan loss allowance to noncurrent loans, the better.

Earnings score

A bank's earnings performance affects its long-term survivability. Earnings may be retained by the bank, increasing its capital buffer, or be used to deal with problematic loans, potentially making the bank more resilient in times of trouble. Banks that are losing money, however, are less able to do those things.

American Eagle Bank received above-average marks on Bankrate's test of earnings, achieving a score of 20 out of a possible 30.

Return on equity, calculated by dividing net income (profit, essentially) by the total amount of equity, is one important measure of a bank's earnings. American Eagle Bank's most recent annualized quarterly return on equity was 10.79 percent, above the national average of 9.28 percent.

For the twelve months ended June 30, 2017, the bank earned net income of $970,000 on total equity of $18.1 million. The bank had an annualized return on average assets, or ROA, of 1.01 percent, above the 1 percent deemed satisfactory in accordance with industry standards, but below the average for U.S. banks of 1.14 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.