Safe and Sound

Metropolitan Capital Bank & Trust

Chicago, IL
1
Star Rating
Chicago, IL-based Metropolitan Capital Bank & Trust is an FDIC-insured bank founded in 2005. The bank holds equity of $22.8 million on assets of $286.2 million, according to December 31, 2017, regulatory filings.

Thanks to the work of 52 full-time employees, the bank has amassed loans and leases worth $228.6 million, including $41.9 million worth of real estate loans. U.S. bank customers currently have $256.5 million in deposits with the bank.

Overall, Bankrate believes that, as of December 31, 2017, Metropolitan Capital Bank & Trust exhibited a significantly below-average condition, earning 1 out of 5 stars for safety and soundness. Here's a breakdown of how the bank did on the three key criteria Bankrate used to grade U.S. banks.

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THE INSTITUTION'S SCORE

Capital Score

Capital is a key measurement of an institution's financial strength. It works as a buffer against losses and affords protection for depositors when a bank is experiencing economic instability. When looking at safety and soundness, the higher the capital, the better.

Metropolitan Capital Bank & Trust received a score of 6 out of a possible 30 points on our test to measure capital adequacy, failing to reach the national average of 13.13.

One important measure of this buffer is a bank's Tier 1 capital ratio. Metropolitan Capital Bank & Trust's Tier 1 capital ratio was 8.81 percent, exceeding the 6 percent level considered adequate by regulators, but below the national average of 25.65 percent. A higher capital ratio suggests the bank will be better able to stand up to economic headwinds.

Overall, Metropolitan Capital Bank & Trust held equity amounting to 7.96 percent of its assets, which was lower than the national average of 12.03 percent.

Asset Quality Score

This test is intended to try to understand how the bank's loan loss reserves and overall capitalization could be affected by problem assets, such as past-due mortgages.

Having extensive holdings of these kinds of assets means a bank could eventually have to use capital to absorb losses, diminishing its equity buffer. Many of those assets are also likely to be in non-accrual status and no longer earning interest for the bank, resulting in depressed earnings and potentially more risk of a failure in the future.

On Bankrate's test of asset quality, Metropolitan Capital Bank & Trust scored 8 out of a possible 40 points, below the national average of 37.49 points.

A helpful indicator of asset quality is the percentage of problem assets a bank holds compared to its total assets. As of December 31, 2017, 4.38 percent of Metropolitan Capital Bank & Trust'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 maintain a reserve known as an "allowance for loan and lease losses" to deal with problem assets . Comparing the reserve's size to the total amount of problematic loans can be a handy indicator when evaluating a bank's ability to manage problem assets. Unfortunately, the FDIC did not provide information on Metropolitan Capital Bank & Trust'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. A bank can retain its earnings, expanding its capital cushion, or use them to address problematic loans, potentially making the bank more resilient in tough times. Conversely, losses lessen a bank's ability to do those things.

Metropolitan Capital Bank & Trust fell behind the national average on Bankrate's earnings test, achieving a score of 14 out of a possible 30.

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. The most recent annualized quarterly return on equity for Metropolitan Capital Bank & Trust was 6.90 percent, below the national average of 8.10 percent.

For the twelve months ended December 31, 2017, the bank recorded net income of $1.5 million on total equity of $22.8 million. The bank had an annualized return on average assets, or ROA, of 0.54 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.