Safe and Sound

International Bank of Chicago

Chicago, IL
4
Star Rating
Started in 1992, International Bank of Chicago is an FDIC-insured bank based in Chicago, IL. The bank holds equity of $72.4 million on assets of $577.6 million, according to December 31, 2017, regulatory filings.

U.S. bank customers have $501.1 million on deposit at 7 offices in multiple states run by 101 full-time employees. With that footprint, the bank holds loans and leases worth $409.2 million, including $365.2 million worth of real estate loans.

Overall, Bankrate believes that, as of December 31, 2017, International Bank of Chicago exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Keep reading for an analysis of how the bank fared on the three key criteria Bankrate used to evaluate U.S. banks.

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THE INSTITUTION'S SCORE

Capital Score

Capital is a crucial measurement of a bank's financial fortitude. It works as a buffer against losses and as protection for depositors when a bank is experiencing financial instability. When it comes to safety and soundness, the higher the capital, the better.

International Bank of Chicago racked up 16 out of a possible 30 points on our test to measure capital adequacy, beating out the national average of 13.13.

One essential measure of this buffer is a bank's Tier 1 capital ratio. International Bank of Chicago's Tier 1 capital ratio was 19.47 percent, above the 6 percent level regulators consider adequate, but below the national average of 25.65 percent. The higher the capital ratio, the better the bank will be able to stand up to economic headwinds.

Overall, International Bank of Chicago held equity amounting to 12.54 percent of its assets, which exceeded the national average of 12.03 percent.

Asset Quality Score

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

A bank with lots of these kinds of assets could eventually have to use capital to cover losses, reducing 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, resulting in lower earnings and potentially more risk of a failure in the future.

On Bankrate's test of asset quality, International Bank of Chicago scored 28 out of a possible 40 points, coming in below the national average of 37.49 points.

The percentage of problem assets a bank holds compared to its total assets is a widely used indicator of asset quality.As of December 31, 2017, 2.99 percent of International Bank of Chicago'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 keep a reserve to handle problem assets known as an "allowance for loan and lease losses." Comparing how large that reserve is 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 International Bank of Chicago's loan loss allowance in its most recent filings.

Earnings score

A bank's ability to earn money has an effect on its safety and soundness. Earnings can be retained by the bank, giving a boost to its capital cushion, or be used to deal with problematic loans, potentially making the bank more resilient in tough times. Conversely, losses reduce a bank's ability to do those things.

International Bank of Chicago scored 22 out of a possible 30 on Bankrate's test of earnings, beating out the national average of 15.12.

Return on equity, calculated by dividing net income (profit, essentially) by total equity, is one key measure of a bank's earnings. International Bank of Chicago's most recent annualized quarterly return on equity was 13.03 percent, above the national average of 8.10 percent.

For the twelve months ended December 31, 2017, the bank recorded net income of $9.2 million on total equity of $72.4 million. The bank experienced an annualized return on average assets, or ROA, of 1.72 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.