Safe and Sound

CIBC BANK USA

Chicago, IL
5
Star Rating
Started in 1991, CIBC Bank USA is an FDIC-insured bank based in Chicago, IL. The bank has equity of $5.24 billion on $25.24 billion in assets, according to June 30, 2017, regulatory filings.

Thanks to the efforts of 1,358 full-time employees in 27 offices in multiple states, the bank holds loans and leases worth $15.82 billion, $7.58 billion of which are for real estate. U.S. bank customers currently have $19.26 billion in deposits with the bank.

Overall, Bankrate believes that, as of June 30, 2017, CIBC Bank USA exhibited a superior condition, earning a full 5 stars for safety and soundness. Keep reading for a breakdown of how the bank fared on the three major criteria Bankrate used to score U.S. banks on safety and soundness.

WHAT IS
SAFE AND SOUND?

Find out

THE INSTITUTION'S SCORE

Capital Score

When it comes to measuring an a bank's financial resilience, capital is valuable. It works as a bulwark against losses and as protection for depositors when a bank is struggling financially. When it comes to safety and soundness, more capital is better.

CIBC Bank USA received a score of 10 out of a possible 30 points on our test to measure capital adequacy, lower than the national average of 11.67.

A bank's Tier 1 capital ratio is a widely followed measure of this buffer. CIBC Bank USA's Tier 1 capital ratio was 11.60 percent, higher than the 6 percent level considered adequate by regulators, but lower than the national average of 12.50 percent. The higher the capital ratio, the better the bank will be able to weather economic headwinds.

Overall, CIBC Bank USA held equity amounting to 20.76 percent of its assets, which exceeded the national average of 13.94 percent.

Asset Quality Score

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

Having a large number of these kinds of assets could eventually force a bank to use capital to cover losses, decreasing 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, decreasing earnings and increasing the chances of a failure in the future.

CIBC Bank USA scored 40 out of a possible 40 points on Bankrate's asset quality test, exceeding the national average of 38.67.

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, 0.43 percent of CIBC Bank USA's loans were noncurrent, meaning they were more than 90 days past due or were in non-accrual status. That's below the national average of 1.24 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 useful 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 CIBC Bank USA'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, expanding its capital cushion, or put them to work addressing problematic loans, potentially making the bank more resilient in times of trouble. Conversely, losses take away from a bank's ability to do those things.

CIBC Bank USA scored 22 out of a possible 30 on Bankrate's earnings test, beating out the national average of 20.00.

One important way to measure a bank's earnings is return on equity, calculated by dividing net income (profit, basically) by total equity. CIBC Bank USA's most recent annualized quarterly return on equity was 0.26 percent, below the national average of 9.24 percent.

The bank recorded net income of $4.2 million on total equity of $5.24 billion for the twelve months ended June 30, 2017. The bank had an annualized return on average assets, or ROA, of 0.04 percent, below the 1 percent deemed satisfactory in accordance with industry standards and below the average for U.S. banks of 1.13 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.