Safe and Sound

Northbrook Bank and Trust Company

Northbrook, IL
4
Star Rating
Northbrook, IL-based Northbrook Bank and Trust Company is an FDIC-insured bank founded in 2000. Regulatory filings show the bank having equity of $211.5 million on $2.27 billion in assets, as of December 31, 2017.

U.S. bank customers have $2.02 billion on deposit at 8 offices in IL run by 82 full-time employees. With that footprint, the bank holds loans and leases worth $1.69 billion, including $664.9 million worth of real estate loans.

Overall, Bankrate believes that, as of December 31, 2017, Northbrook Bank and Trust Company exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Keep reading for a look at how the bank did on the three key criteria Bankrate used to score U.S. banks.

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SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

Capital is a key measurement of a bank's financial strength. It acts as a buffer against losses and affords protection for accountholders when a bank is experiencing financial trouble. From a safety and soundness perspective, the more capital, the better.

Northbrook Bank and Trust Company received a score of 8 out of a possible 30 points on our test to measure capital adequacy, falling short of the national average of 13.13.

One widely used measure of this buffer is a bank's Tier 1 capital ratio. Northbrook Bank and Trust Company's Tier 1 capital ratio was 10.20 percent, higher than the 6 percent level regulators consider adequate, but less than the national average of 25.65 percent. The higher the capital ratio, the better the bank will be able to stand up to financial downturns.

Overall, Northbrook Bank and Trust Company held equity amounting to 9.33 percent of its assets, which was lower than 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.

A bank with extensive holdings of these kinds of assets could eventually have to use capital to absorb losses, cutting down on 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 interest for the bank, reducing earnings and increasing the risk of a failure in the future.

Northbrook Bank and Trust Company exceeded the national average of 37.49 on Bankrate's asset quality test, racking up 40 out of a possible 40 points .

The percentage of problem assets a bank holds compared to its total assets is a widely used indicator of asset quality.As of December 31, 2017, 0.47 percent of Northbrook Bank and Trust Company'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 maintain a reserve known as an "allowance for loan and lease losses" to deal with troubled assets . That reserve's size can be a helpful indicator when evaluating a bank's ability to manage troubled assets, especially when compared to the total amount of at-risk loans. Unfortunately, the FDIC did not provide information on Northbrook Bank and Trust Company's loan loss allowance in its most recent filings.

Earnings score

How profitable a bank is has an effect on its long-term survivability. A bank can retain its earnings, giving a boost to its capital cushion, or use them to address problematic loans, likely making the bank better prepared to withstand economic shocks. Banks that are losing money, however, are less able to do those things.

Northbrook Bank and Trust Company scored 20 out of a possible 30 on Bankrate's test of earnings, better than the national average of 15.12.

Return on equity, calculated by dividing net income (essentially, profit) by total equity, is one important way to measure a bank's earnings. The most recent annualized quarterly return on equity for Northbrook Bank and Trust Company was 12.60 percent, above the national average of 8.10 percent.

The bank reported net income of $24.7 million on total equity of $211.5 million for the twelve months ended December 31, 2017. The bank reported an annualized return on average assets, or ROA, of 1.16 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.