Safe and Sound

Forest Park National Bank and Trust Company

Forest Park, IL
4
Star Rating
Forest Park National Bank and Trust Company is a Forest Park, IL-based, FDIC-insured bank dating back to 1943. As of December 31, 2017, the bank had equity of $19.4 million on assets of $239.7 million.

With 50 full-time employees in 2 offices in IL, the bank holds loans and leases worth $183.8 million, including real estate loans of $170.6 million. U.S. bank customers currently have $218.4 million in deposits with the bank.

Overall, Bankrate believes that, as of December 31, 2017, Forest Park National Bank and Trust Company 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 important criteria Bankrate used to score U.S. banks.

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THE INSTITUTION'S SCORE

Capital Score

Capital is a useful measurement of an institution's financial fortitude. It acts as a buffer against losses and provides protection for depositors when a bank is experiencing financial instability. When looking at safety and soundness, more capital is preferred.

Forest Park National Bank and Trust Company received a score of 8 out of a possible 30 points on our test to measure capital adequacy, coming in below the national average of 13.13.

One important measure of this buffer is a bank's Tier 1 capital ratio. Forest Park National Bank and Trust Company's Tier 1 capital ratio was 10.57 percent, above the 6 percent level regulators consider adequate, but below the national average of 25.65 percent. A higher capital ratio suggests the bank will be better able to weather economic downturns.

Overall, Forest Park National Bank and Trust Company held equity amounting to 8.10 percent of its assets, which was lower than the national average of 12.03 percent.

Asset Quality Score

This test is intended to estimate how the bank's capitalization and allocated loan loss reserves could be affected by troubled assets, such as unpaid mortgages.

Having a large number of these kinds of assets suggests a bank may have to use capital to absorb losses, decreasing its cushion of equity. Many of those assets are also likely to be in non-accrual status and thus aren't earning interest for the bank, pushing down earnings and increasing the chances of a failure in the future.

Forest Park National Bank and Trust Company scored 36 out of a possible 40 points on Bankrate's asset quality test, failing to reach the national average of 37.49.

The percentage of problem assets a bank holds compared to its total assets is a handy indicator of asset quality.As of December 31, 2017, 0.70 percent of Forest Park National Bank and Trust Company'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 1.01 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 widely used 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 Forest Park National Bank and Trust Company's loan loss allowance in its most recent filings.

Earnings score

How profitable a bank is affects its safety and soundness. Earnings may be retained by the bank, giving a boost to its capital buffer, or be used to deal with problematic loans, potentially making the bank more resilient in tough times. Losses, on the other hand, diminish a bank's ability to do those things.

Forest Park National Bank and Trust Company beat the national average on Bankrate's test of earnings, achieving a score of 20 out of a possible 30.

One key measure of a bank's earnings is return on equity, or net income (profit, basically) divided by the total amount of equity. The most recent annualized quarterly return on equity for Forest Park National Bank and Trust Company was 11.95 percent, above the national average of 8.10 percent.

The bank reported net income of $2.3 million on total equity of $19.4 million for the twelve months ended December 31, 2017. The bank experienced an annualized return on average assets, or ROA, of 0.98 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.