Safe and Sound

Resource Bank, National Association

Dekalb, IL
4
Star Rating
Dekalb, IL-based Resource Bank, National Association is an FDIC-insured bank started in 1901. Regulatory filings show the bank having equity of $41.7 million on assets of $451.0 million, as of June 30, 2017.

Thanks to the work of 149 full-time employees in 10 offices in IL, the bank has amassed loans and leases worth $261.3 million, $221.9 million of which are for real estate. The bank currently holds $403.0 million in deposits from U.S. customers.

Overall, Bankrate believes that, as of June 30, 2017, Resource Bank, National Association exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Keep reading for a breakdown of how the bank faired on the three key criteria Bankrate used to evaluate American banks.

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THE INSTITUTION'S SCORE

Capital Score

When it comes to measuring an a bank's financial fortitude, capital is key. It acts as a cushion against losses and as protection for depositors when a bank is struggling financially. When it comes to safety and soundness, the more capital, the better.
Resource Bank, National Association received a score of 10 out of a possible 30 points on our test to measure capital adequacy, failing to reach the national average of 13.38.

A bank's Tier 1 capital ratio is a widely used measure of this buffer. Resource Bank, National Association's Tier 1 capital ratio was 13.77 percent, higher than the 6 percent level regulators consider adequate, but less than the national average of 25.16 percent. The higher the capital ratio, the better the bank will be able to weather financial challenges.

Overall, Resource Bank, National Association held equity amounting to 9.24 percent of its assets, which was lower than the national average of 12.10 percent.

Asset Quality Score

Bankrate uses this test to estimate the effect of troubled assets, such as unpaid loans, on the bank's reserves set aside to cover loan losses, as well as overall capitalization.

Having large numbers of these kinds of assets suggests a bank may eventually have to use capital to cover losses, reducing its buffer of equity. Many of those assets are also likely to be in non-accrual status and thus aren't earning money, pushing down earnings and increasing the risk of a future failure.

On Bankrate's test of asset quality, Resource Bank, National Association scored 36 out of a possible 40 points, falling short of the national average of 37.62 points.

The percentage of problem assets a bank holds compared to its total assets is a helpful indicator of asset quality.As of June 30, 2017, 2.67 percent of Resource Bank, National Association's loans were noncurrent -- in other words, they were more than 90 days past due or were in non-accrual status. That's above the national average of 1.04 percent.

Banks maintain a reserve to deal with problem assets known as an "allowance for loan and lease losses." The size of that reserve can be a useful indicator when evaluating a bank's ability to manage problem assets, especially when compared to the total amount of problematic loans. Unfortunately, the FDIC did not provide information on Resource Bank, National Association's loan loss allowance in its most recent filings.

Earnings score

How profitable a bank is has an effect on its long-term survivability. A bank can retain its earnings, boosting its capital buffer, or put them to work addressing problematic loans, potentially making the bank more resilient in tough times. Obviously, banks that are losing money have less ability to do those things.

Resource Bank, National Association scored 16 out of a possible 30 on Bankrate's earnings test, below the national average of 16.52.

Return on equity, calculated by dividing net income (profit, basically) by the total amount of equity, is one important measure of a bank's earnings. Resource Bank, National Association's most recent annualized quarterly return on equity was 8.33 percent, below the national average of 9.28 percent.

The bank recorded net income of $1.7 million on total equity of $41.7 million for the twelve months ended June 30, 2017. The bank had an annualized return on average assets, or ROA, of 0.76 percent, below the 1 percent deemed satisfactory in accordance with industry standards and 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.