Safe and Sound

Lake Forest Bank & Trust Company, National Association

Lake Forest, IL
5
Star Rating
Started in 1986, Lake Forest Bank & Trust Company, National Association is an FDIC-insured bank based in Lake Forest, IL. The bank has equity of $382.4 million on $3.56 billion in assets, according to December 31, 2017, regulatory filings.

U.S. bank customers have $2.87 billion on deposit at 8 offices in IL run by 424 full-time employees. With that footprint, the bank holds loans and leases worth $2.71 billion, including $686.0 million worth of real estate loans.

Overall, Bankrate believes that, as of December 31, 2017, Lake Forest Bank & Trust Company, National Association exhibited a superior condition, earning a full 5 stars for safety and soundness. Here's a look at how the bank fared on the three key criteria Bankrate used to score U.S. 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 affords protection for depositors when a bank is experiencing financial trouble. It follows then that when it comes to measuring an a bank's financial stability, capital is important. When it comes to safety and soundness, the higher the capital, the better.

On our test to measure capital adequacy, Lake Forest Bank & Trust Company, National Association received a score of 10 out of a possible 30 points, coming in below the national average of 13.13.

A bank's Tier 1 capital ratio is an important measure of this buffer. Lake Forest Bank & Trust Company, National Association's Tier 1 capital ratio was 10.97 percent, higher than the 6 percent level considered adequate by regulators, but under the national average of 25.65 percent. The higher the capital ratio, the better the bank will be able to weather financial downturns.

Overall, Lake Forest Bank & Trust Company, National Association held equity amounting to 10.73 percent of its assets, which was lower than the national average of 12.03 percent.

Asset Quality Score

In this test, Bankrate tries to determine the effect of troubled assets, such as past-due loans, on the bank's reserves set aside to cover loan losses, as well as overall capitalization.

A bank with a large number of these kinds of assets could eventually be forced 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 interest for the bank, resulting in reduced earnings and potentially more risk of a future failure.

On Bankrate's test of asset quality, Lake Forest Bank & Trust Company, National Association scored 40 out of a possible 40 points, better than the national average of 37.49 points.

A widely used indicator of asset quality is the percentage of problem assets a bank holds compared to its total assets. As of December 31, 2017, 0.61 percent of Lake Forest Bank & Trust Company, National Association's loans were noncurrent -- in other words, 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 keep a reserve known as an "allowance for loan and lease losses" to deal with troubled assets . Comparing how large that reserve is to the total amount of problematic loans can be a useful indicator when evaluating a bank's ability to manage troubled assets. Unfortunately, the FDIC did not provide information on Lake Forest Bank & Trust Company, National Association'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 can be retained by the bank, giving a boost to its capital cushion, or be used to address problematic loans, potentially making the bank more resilient in tough times. Losses, on the other hand, take away from a bank's ability to do those things.

Lake Forest Bank & Trust Company, National Association did above-average on Bankrate's test of earnings, achieving a score of 24 out of a possible 30.

One widely used way to measure a bank's earnings is return on equity, calculated by dividing net income (essentially profit) by the total amount of equity. Lake Forest Bank & Trust Company, National Association's most recent annualized quarterly return on equity was 15.40 percent, above the national average of 8.10 percent.

The bank earned net income of $58.0 million on total equity of $382.4 million for the twelve months ended December 31, 2017. The bank had an annualized return on average assets, or ROA, of 1.71 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.