Safe and Sound

Northbrook Bank and Trust Company

Northbrook, IL
5
Star Rating
Northbrook Bank and Trust Company is an FDIC-insured bank founded in 2000 and currently based in Northbrook, IL. As of June 30, 2017, the bank held equity of $198.3 million on $2,190,020,000 in assets.

U.S. bank customers have $1.95 billion on deposit at 8 offices in IL run by 94 full-time employees. With that footprint, the bank currently holds loans and leases worth $1.58 billion, including real estate loans of $679.1 million.

Overall, Bankrate believes that, as of June 30, 2017, Northbrook Bank and Trust Company exhibited a superior condition, earning a full 5 stars for safety and soundness. Here's an analysis of how the bank did on the three key criteria Bankrate used to grade U.S. banks on safety and soundness.

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 depositors during periods of economic instability for the bank. It follows then that when it comes to measuring an a bank's financial stability, capital is crucial. When looking at safety and soundness, the higher the capital, the better.
Northbrook Bank and Trust Company received a score of 8 out of a possible 30 points on our test to measure capital adequacy, failing to reach the national average of 13.38.

One way to measure this buffer is looking at a bank's Tier 1 capital ratio. Northbrook Bank and Trust Company's Tier 1 capital ratio was 10.02 percent, exceeding the 6 percent level considered adequate by regulators, but less than the national average of 25.16 percent. A higher capital ratio suggests the bank will be better able to weather financial downturns.

Overall, Northbrook Bank and Trust Company 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 mortgages, on the bank's loan loss reserves and overall capitalization.

Having large numbers of these types of assets suggests a bank could eventually have to use capital to absorb losses, decreasing its cushion of equity. Many of those assets are also likely to be in non-accrual status and no longer earning interest for the bank, resulting in lower earnings and potentially more risk of a future failure.

On Bankrate's test of asset quality, Northbrook Bank and Trust Company scored 40 out of a possible 40 points, better than the national average of 37.62 points.

A handy indicator of asset quality is the percentage of problem assets a bank holds compared to its total assets. As of June 30, 2017, 0.48 percent of Northbrook Bank and Trust Company's loans were noncurrent -- in other words, 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 maintain a reserve to deal with troubled assets known as an "allowance for loan and lease losses." That reserve's size can be a handy indicator when evaluating a bank's ability to manage problem assets, especially when compared to the total amount of problem loans. Unfortunately, the FDIC did not provide information on Northbrook Bank and Trust Company's loan loss allowance in its most recent filings.

Earnings score

A bank's profitability has an effect on its safety and soundness. Earnings may be retained by the bank, boosting its capital buffer, or be used to address problematic loans, potentially making the bank better prepared to withstand financial trouble. Obviously, banks that are losing money are less able to do those things.

Northbrook Bank and Trust Company outperformed the average on Bankrate's earnings test, achieving a score of 24 out of a possible 30.

One important measure of a bank's earnings is return on equity, or net income (profit, basically) divided by total equity. The most recent annualized quarterly return on equity for Northbrook Bank and Trust Company was 15.44 percent, above the national average of 9.28 percent.

For the twelve months ended June 30, 2017, the bank recorded net income of $14.5 million on total equity of $198.3 million. The bank reported an annualized return on average assets, or ROA, of 1.40 percent, above the 1 percent deemed satisfactory in accordance with industry standards, and above 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.