Safe and Sound

North Shore Trust and Savings

Waukegan, IL
5
Star Rating
Waukegan, IL-based North Shore Trust and Savings is an FDIC-insured bank founded in 1921. Regulatory filings show the bank having equity of $43.3 million on assets of $227.6 million, as of December 31, 2017.

U.S. bank customers have $181.8 million on deposit at 3 offices in IL run by 44 full-time employees. With that footprint, the bank has amassed loans and leases worth $95.5 million, including real estate loans of $95.5 million.

Overall, Bankrate believes that, as of December 31, 2017, North Shore Trust and Savings exhibited a superior condition, earning a full 5 stars for safety and soundness. Here's a breakdown of how the bank did on the three major criteria Bankrate used to score U.S. banks on safety and soundness.

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THE INSTITUTION'S SCORE

Capital Score

Capital is a valuable measurement of an institution's financial strength. It works as a cushion against losses and provides protection for depositors during times of financial trouble for the bank. From a safety and soundness perspective, more capital is better.

North Shore Trust and Savings did better than the national average of 13.13 points on our test to measure capital adequacy, racking up 28 out of a possible 30 points.

A bank's Tier 1 capital ratio is an important measure of this buffer. North Shore Trust and Savings's Tier 1 capital ratio was 57.32 percent, higher than 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 weather economic downturns.

Overall, North Shore Trust and Savings held equity amounting to 19.00 percent of its assets, which exceeded the national average of 12.03 percent.

Asset Quality Score

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

Having lots of these types of assets suggests a bank may have to use capital to cover losses, decreasing its equity buffer. It also means that there are likely to be many assets that are in non-accrual status and thus aren't earning money, resulting in reduced earnings and potentially more risk of a future failure.

On Bankrate's asset quality test, North Shore Trust and Savings scored 40 out of a possible 40 points, beating the national average of 37.49 points.

A handy indicator of asset quality is the percentage of problem assets a bank holds compared to its total assets. As of December 31, 2017, 0.65 percent of North Shore Trust and Savings'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 problem assets . Comparing the reserve's size to the total amount of problematic loans can be a helpful indicator when evaluating a bank's ability to manage troubled assets. Unfortunately, the FDIC did not provide information on North Shore Trust and Savings's loan loss allowance in its most recent filings.

Earnings score

A bank's ability to earn money affects its long-term survivability. A bank can retain its earnings, increasing its capital cushion, or put them to work addressing problematic loans, likely making the bank better prepared to withstand financial shocks. Conversely, losses lessen a bank's ability to do those things.

North Shore Trust and Savings scored 2 out of a possible 30 on Bankrate's test of earnings, lower 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 key measure of a bank's earnings. The most recent annualized quarterly return on equity for North Shore Trust and Savings was 0.57 percent, below the national average of 8.10 percent.

The bank earned net income of $246,000 on total equity of $43.3 million for the twelve months ended December 31, 2017. The bank had an annualized return on average assets, or ROA, of 0.11 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.