Safe and Sound

Municipal Trust and Savings Bank

Bourbonnais, IL
5
Star Rating
Municipal Trust and Savings Bank is an FDIC-insured bank founded in 1981 and currently headquartered in Bourbonnais, IL. The bank has equity of $53.8 million on assets of $299.2 million, according to December 31, 2017, regulatory filings.

Thanks to the efforts of 49 full-time employees in 3 offices in IL, the bank holds loans and leases worth $176.7 million, including $172.1 million worth of real estate loans. The bank currently holds $231.6 million in deposits from U.S. customers.

Overall, Bankrate believes that, as of December 31, 2017, Municipal Trust and Savings Bank exhibited a superior condition, earning a full 5 stars for safety and soundness. Here's a look at how the bank did on the three key criteria Bankrate used to evaluate U.S. banks on safety and soundness.

WHAT IS
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THE INSTITUTION'S SCORE

Capital Score

When it comes to measuring an an institution's financial fortitude, capital is important. It acts as a cushion against losses and provides protection for depositors during times of financial trouble for the bank. From a safety and soundness perspective, the higher the capital, the better.

Municipal Trust and Savings Bank beat out the national average of 13.13 points on our test to measure the adequacy of a bank's capital, receiving a score of 26 out of a possible 30 points.

A bank's Tier 1 capital ratio is a widely followed measure of this buffer. Municipal Trust and Savings Bank's Tier 1 capital ratio was 34.73 percent, above the 6 percent level regulators consider adequate, and exceeding the national average of 25.65 percent. A higher capital ratio suggests the bank will be better able to stand up to financial difficulties.

Overall, Municipal Trust and Savings Bank held equity amounting to 18.00 percent of its assets, which exceeded the national average of 12.03 percent.

Asset Quality Score

This test's purpose is to try to understand how the bank's loan loss reserves and overall capitalization could be affected by troubled assets, such as unpaid loans.

Having extensive holdings of these types of assets means a bank may have to use capital to cover losses, diminishing 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, diminishing earnings and increasing the risk of a future failure.

On Bankrate's test of asset quality, Municipal Trust and Savings Bank scored 40 out of a possible 40 points, beating out 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, none of Municipal Trust and Savings Bank'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 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 problem assets. Unfortunately, the FDIC did not provide information on Municipal Trust and Savings Bank's loan loss allowance in its most recent filings.

Earnings score

How profitable a bank is affects its long-term survivability. Earnings may be retained by the bank, increasing its capital buffer, or be used to deal with problematic loans, potentially making the bank better prepared to withstand economic trouble. Obviously, banks that are losing money have less ability to do those things.

On Bankrate's earnings test, Municipal Trust and Savings Bank scored 22 out of a possible 30, better than the national average of 15.12.

Return on equity, calculated by dividing net income (profit, basically) by the total amount of equity, is one important measure of a bank's earnings. The most recent annualized quarterly return on equity for Municipal Trust and Savings Bank was 12.08 percent, above the national average of 8.10 percent.

The bank earned net income of $6.5 million on total equity of $53.8 million for the twelve months ended December 31, 2017. The bank experienced an annualized return on average assets, or ROA, of 2.15 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.