Safe and Sound

The PrivateBank and Trust Company

Chicago, IL
5
Star Rating
Chicago, IL-based The PrivateBank and Trust Company is an FDIC-insured bank founded in 1991. As of June 30, 2017, the bank had equity of $2.31 billion on $22,284,353,000 in assets.

Thanks to the efforts of 1,358 full-time employees in 27 offices in multiple states, the bank holds loans and leases worth $15.80 billion, including $7.62 billion worth of real estate loans. U.S. bank customers currently have $19.26 billion in deposits with the bank.

Overall, Bankrate believes that, as of June 30, 2017, The PrivateBank and Trust Company exhibited a superior condition, earning a full 5 stars for safety and soundness. Here's a look at how the bank faired on the three key criteria Bankrate used to score U.S. banks on safety and soundness.

WHAT IS
SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

Capital is an important measurement of an institution's financial strength. It works as a bulwark against losses and provides protection for depositors during periods of economic instability for the bank. From a safety and soundness perspective, the more capital, the better.
The PrivateBank and Trust Company received a score of 10 out of a possible 30 points on our test to measure the adequacy of a bank's capital, lower than the national average of 13.38.

A bank's Tier 1 capital ratio is an essential measure of this buffer. The PrivateBank and Trust Company's Tier 1 capital ratio was 11.23 percent, exceeding the 6 percent level regulators consider adequate, but below the national average of 25.16 percent. A higher capital ratio means the bank will be better able to stand up to financial difficulties.

Overall, The PrivateBank and Trust Company held equity amounting to 10.37 percent of its assets, which was lower than the national average of 12.10 percent.

Asset Quality Score

This test's purpose is to estimate how the bank's loan loss reserves and overall capitalization could be affected by problem assets, such as past-due loans.

A bank with a large number of these kinds of assets could eventually be forced 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 no longer earning interest for the bank, diminishing earnings and increasing the chances of a future failure.

The PrivateBank and Trust Company scored 40 out of a possible 40 points on Bankrate's asset quality test, beating the national average of 37.62.

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, 0.82 percent of The PrivateBank 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 known as an "allowance for loan and lease losses" to deal with problem assets . How large that reserve is can be a helpful indicator when evaluating a bank's ability to manage troubled assets, especially when compared to the total amount of problem loans. Unfortunately, the FDIC did not provide information on The PrivateBank and Trust Company'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, giving a boost to its capital cushion, or put them to work addressing problematic loans, potentially making the bank better prepared to withstand financial shocks. Obviously, banks that are losing money are less able to do those things.

On Bankrate's test of earnings, The PrivateBank and Trust Company scored 22 out of a possible 30, beating the national average of 16.52.

Return on equity, calculated by dividing net income (profit, essentially) by the total amount of equity, is one widely used measure of a bank's earnings. The PrivateBank and Trust Company's most recent annualized quarterly return on equity was 12.69 percent, above the national average of 9.28 percent.

For the twelve months ended June 30, 2017, the bank recorded net income of $141.3 million on total equity of $2.31 billion. The bank experienced an annualized return on average assets, or ROA, of 1.35 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.