Safe and Sound

Byline Bank

Chicago, IL
4
Star Rating
Byline Bank is a Chicago, IL-based, FDIC-insured bank that opened its doors in 1972. The bank holds equity of $445.8 million on assets of $3.36 billion, according to December 31, 2017, regulatory filings.

With 844 full-time employees in 61 offices in multiple states, the bank holds loans and leases worth $2.27 billion, including real estate loans of $1.58 billion. U.S. bank customers currently have $2.48 billion in deposits with the bank.

Overall, Bankrate believes that, as of December 31, 2017, Byline Bank exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Keep reading for a look at how the bank fared on the three major criteria Bankrate used to evaluate American banks.

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THE INSTITUTION'S SCORE

Capital Score

When it comes to measuring an an institution's financial strength, capital is important. It works as a bulwark against losses and affords protection for accountholders during periods of economic trouble for the bank. From a safety and soundness perspective, more capital is better.

Byline Bank finished below the national average of 13.13 on our test to measure capital adequacy, racking up 12 out of a possible 30 points.

A bank's Tier 1 capital ratio is an essential measure of this buffer. Byline Bank's Tier 1 capital ratio was 13.57 percent, exceeding the 6 percent level considered adequate by regulators, but under the national average of 25.65 percent. A higher capital ratio means the bank will be better able to stand up to financial downturns.

Overall, Byline Bank held equity amounting to 13.25 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 troubled assets, such as unpaid mortgages.

Having large numbers of these kinds of assets suggests a bank may have to use capital to absorb 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, resulting in depressed earnings and potentially more risk of a failure in the future.

Byline Bank scored below the national average of 37.49 on Bankrate's test of asset quality, racking up 36 out of a possible 40 points .

A useful indicator of asset quality is the percentage of problem assets a bank holds compared to its total assets. As of December 31, 2017, 1.99 percent of Byline Bank's loans were noncurrent, meaning 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 . Comparing the size of that reserve to the total amount of problem loans can be a useful indicator when evaluating a bank's ability to manage troubled assets. Unfortunately, the FDIC did not provide information on Byline Bank'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, expanding its capital cushion, or use them to deal with problematic loans, potentially making the bank better able to withstand financial trouble. Conversely, losses diminish a bank's ability to do those things.

Byline Bank scored 12 out of a possible 30 on Bankrate's earnings test, failing to reach 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. Byline Bank's most recent annualized quarterly return on equity was 5.78 percent, below the national average of 8.10 percent.

For the twelve months ended December 31, 2017, the bank recorded net income of $25.1 million on total equity of $445.8 million. 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 1.00 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.