Safe and Sound

Heartland Bank and Trust Company

Bloomington, IL
5
Star Rating
Founded in 1971, Heartland Bank and Trust Company is an FDIC-insured bank based in Bloomington, IL. Regulatory filings show the bank having equity of $320.1 million on $2.97 billion in assets, as of December 31, 2017.

With 701 full-time employees in 58 offices in IL, the bank has amassed loans and leases worth $1.97 billion, including real estate loans of $1.49 billion. U.S. bank customers currently have $2.55 billion in deposits with the bank.

Overall, Bankrate believes that, as of December 31, 2017, Heartland Bank and Trust Company exhibited a superior condition, earning a full 5 stars for safety and soundness. Here's a breakdown of how the bank fared on the three major criteria Bankrate used to score American banks on safety and soundness.

WHAT IS
SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

Capital acts as a bulwark against losses and provides protection for account holders during times of economic trouble for the bank. It follows then that when it comes to measuring an an institution's financial resilience, capital is important. When it comes to safety and soundness, more capital is preferred.

Heartland Bank and Trust Company received a score of 10 out of a possible 30 points on our test to measure capital adequacy, below the national average of 13.13.

One way to measure this buffer is looking at a bank's Tier 1 capital ratio. Heartland Bank and Trust Company's Tier 1 capital ratio was 12.81 percent, above the 6 percent level considered adequate by regulators, but lower than the national average of 25.65 percent. A higher capital ratio means the bank will be better able to stand up to economic headwinds.

Overall, Heartland Bank and Trust Company held equity amounting to 10.79 percent of its assets, which was lower than the national average of 12.03 percent.

Asset Quality Score

Bankrate uses this test to estimate the effect of problem assets, such as unpaid loans, on the bank's loan loss reserves and overall capitalization.

Having a large number of these types of assets could eventually require a bank to use capital to cover losses, cutting down on its buffer of equity. Many of those assets are also likely to be in non-accrual status and thus aren't earning money, diminishing earnings and elevating the risk of a future failure.

Heartland Bank and Trust Company scored 36 out of a possible 40 points on Bankrate's test of asset quality, below 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, 1.11 percent of Heartland Bank 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 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 . That reserve's size can be a widely used indicator when evaluating a bank's ability to manage problem assets, especially when compared to the total amount of problem loans. Unfortunately, the FDIC did not provide information on Heartland Bank and Trust Company's loan loss allowance in its most recent filings.

Earnings score

How profitable a bank is has an effect on its long-term survivability. Earnings may be retained by the bank, boosting its capital buffer, or be used to deal with problematic loans, potentially making the bank better able to withstand economic trouble. Losses, on the other hand, reduce a bank's ability to do those things.

On Bankrate's test of earnings, Heartland Bank and Trust Company scored 26 out of a possible 30, better than the national average of 15.12.

Return on equity, calculated by dividing net income (essentially, profit) by the total amount of equity, is one widely used measure of a bank's earnings. Heartland Bank and Trust Company's most recent annualized quarterly return on equity was 15.95 percent, above the national average of 8.10 percent.

The bank earned net income of $52.0 million on total equity of $320.1 million for the twelve months ended December 31, 2017. The bank had an annualized return on average assets, or ROA, of 1.75 percent, above the 1 percent deemed satisfactory in accordance with industry standards, and above 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.