Safe and Sound

BMO Harris Bank National Association

Chicago, IL
4
Star Rating
Chicago, IL-based BMO Harris Bank National Association is an FDIC-insured bank founded in 1947. The bank has equity of $15.44 billion on assets of $109.37 billion, according to December 31, 2017, regulatory filings.

Thanks to the work of 11,577 full-time employees in 602 offices in multiple states, the bank has amassed loans and leases worth $70.02 billion, including $23.00 billion worth of real estate loans. The bank currently holds $81.16 billion in deposits from U.S. customers.

Overall, Bankrate believes that, as of December 31, 2017, BMO Harris Bank National Association exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Here's a breakdown of how the bank fared on the three major criteria Bankrate used to grade American banks.

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THE INSTITUTION'S SCORE

Capital Score

Capital is a crucial measurement of a bank's financial fortitude. It acts as a cushion against losses and affords protection for accountholders during times of financial instability for the bank. From a safety and soundness perspective, more capital is preferred.

BMO Harris Bank National Association racked up 14 out of a possible 30 points on our test to measure capital adequacy, better than the national average of 13.13.

A bank's Tier 1 capital ratio is an essential measure of this buffer. BMO Harris Bank National Association's Tier 1 capital ratio was 12.75 percent, higher than the 6 percent level considered adequate by regulators, but under the national average of 25.65 percent. The higher the capital ratio, the better the bank will be able to weather economic challenges.

Overall, BMO Harris Bank National Association held equity amounting to 14.12 percent of its assets, which exceeded the national average of 12.03 percent.

Asset Quality Score

This test's purpose is to estimate how the bank's reserves set aside to cover loan losses, as well as overall capitalization, could be affected by problem assets, such as unpaid loans.

Having a large number of these types of assets suggests a bank could have to use capital to cover losses, cutting down on its equity cushion. It also means that there are likely to be many assets that are in non-accrual status and thus aren't earning money, reducing earnings and elevating the chances of a failure in the future.

BMO Harris Bank National Association scored 36 out of a possible 40 points on Bankrate's asset quality test, failing to reach the national average of 37.49.

A widely used indicator of asset quality is the percentage of problem assets a bank holds compared to its total assets. As of December 31, 2017, 1.32 percent of BMO Harris 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 1.01 percent.

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

Earnings score

A bank's profitability affects its long-term survivability. Earnings may be retained by the bank, expanding its capital cushion, or be used to address problematic loans, likely making the bank better able to withstand economic shocks. Obviously, banks that are losing money have less ability to do those things.

BMO Harris Bank National Association scored 6 out of a possible 30 on Bankrate's earnings test, below the national average of 15.12.

One widely used way to measure a bank's earnings is return on equity, or net income (profit, essentially) divided by total equity. BMO Harris Bank National Association's most recent annualized quarterly return on equity was 2.88 percent, below the national average of 8.10 percent.

The bank earned net income of $446.9 million on total equity of $15.44 billion for the twelve months ended December 31, 2017. The bank had an annualized return on average assets, or ROA, of 0.42 percent, below the 1 percent deemed satisfactory in accordance with industry standards and below the average for U.S. banks of 1.00 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.