Safe and Sound

North Side Federal Savings and Loan Association of Chicago

2
Star Rating
Chicago, IL-based North Side Federal Savings and Loan Association of Chicago is an FDIC-insured bank started in 1934. Regulatory filings show the bank having equity of $4.2 million on $42.8 million in assets, as of December 31, 2017.

Thanks to the work of 10 full-time employees, the bank currently holds loans and leases worth $23.2 million, $23.4 million of which are for real estate. The bank currently holds $38.5 million in deposits from U.S. customers.

Overall, Bankrate believes that, as of December 31, 2017, North Side Federal Savings and Loan Association of Chicago exhibited a below-average condition, earning 2 out of 5 stars for safety and soundness. Here's an analysis of how the bank fared on the three major criteria Bankrate used to grade American banks.

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THE INSTITUTION'S SCORE

Capital Score

Capital works as a bulwark against losses and affords protection for account holders when a bank is struggling financially. It follows then that a bank's level of capital is an essential measurement of a bank's financial fortitude. When it comes to safety and soundness, the higher the capital, the better.

North Side Federal Savings and Loan Association of Chicago received a score of 10 out of a possible 30 points on our test to measure the adequacy of a bank's capital, below the national average of 13.13.

A bank's Tier 1 capital ratio is an important measure of this buffer. North Side Federal Savings and Loan Association of Chicago's Tier 1 capital ratio was 23.76 percent, higher than the 6 percent level regulators consider adequate, but lower than 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, North Side Federal Savings and Loan Association of Chicago held equity amounting to 9.69 percent of its assets, which was lower than the national average of 12.03 percent.

Asset Quality Score

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

A bank with large numbers of these types of assets may eventually be forced to use capital to cover losses, decreasing its equity cushion. It also means that there are likely to be many assets that are in non-accrual status and thus aren't earning money, diminishing earnings and elevating the chances of a failure in the future.

On Bankrate's test of asset quality, North Side Federal Savings and Loan Association of Chicago scored 28 out of a possible 40 points, failing to reach the national average of 37.49 points.

A useful indicator of asset quality is the percentage of problem assets a bank holds compared to its total assets. As of December 31, 2017, 4.60 percent of North Side Federal Savings and Loan Association of Chicago's loans were noncurrent -- in other words, 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 troubled assets . Comparing the reserve's size to the total amount of at-risk loans can be a handy indicator when evaluating a bank's ability to manage troubled assets. Unfortunately, the FDIC did not provide information on North Side Federal Savings and Loan Association of Chicago's loan loss allowance in its most recent filings.

Earnings score

A bank's earnings performance has an effect on its safety and soundness. A bank can retain its earnings, giving a boost to its capital buffer, or use them to deal with problematic loans, potentially making the bank more resilient in tough times. Conversely, losses take away from a bank's ability to do those things.

On Bankrate's earnings test, North Side Federal Savings and Loan Association of Chicago scored 0 out of a possible 30, falling short of the national average of 15.12.

One important measure of a bank's earnings is return on equity, or net income (essentially profit) divided by the total amount of equity. The most recent annualized quarterly return on equity for North Side Federal Savings and Loan Association of Chicago was -4.38 percent, below the national average of 8.10 percent.

For the twelve months ended December 31, 2017, the bank recorded net income of $-188,000 on total equity of $4.2 million. The bank experienced an annualized return on average assets, or ROA, of -0.42 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.