Safe and Sound

Republic Bank of Chicago

Oak Brook, IL
5
Star Rating
Oak Brook, IL-based Republic Bank of Chicago is an FDIC-insured bank founded in 1964. Regulatory filings show the bank having equity of $203.6 million on $1.92 billion in assets, as of December 31, 2017.

With 281 full-time employees in 19 offices in IL, the bank currently holds loans and leases worth $1.36 billion, including real estate loans of $924.1 million. U.S. bank customers currently have $1.58 billion in deposits with the bank.

Overall, Bankrate believes that, as of December 31, 2017, Republic Bank of Chicago exhibited a superior condition, earning a full 5 stars for safety and soundness. Here's an analysis of how the bank fared on the three important criteria Bankrate used to score U.S. banks on safety and soundness.

WHAT IS
SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

Capital is an essential measurement of an institution's financial resilience. It works as a cushion against losses and affords protection for accountholders when a bank is experiencing financial trouble. When looking at safety and soundness, the higher the capital, the better.

On our test to measure the adequacy of a bank's capital, Republic Bank of Chicago received a score of 12 out of a possible 30 points, below the national average of 13.13.

One widely used measure of this buffer is a bank's Tier 1 capital ratio. Republic Bank of Chicago's Tier 1 capital ratio was 11.97 percent, exceeding the 6 percent level considered adequate by regulators, 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 challenges.

Overall, Republic Bank of Chicago held equity amounting to 10.60 percent of its assets, which was lower than 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 unpaid mortgages.

Having large numbers of these kinds of assets suggests a bank could have to use capital to absorb losses, decreasing its equity buffer. It also means that there are likely to be many assets that are in non-accrual status and no longer earning money, reducing earnings and increasing the risk of a future failure.

On Bankrate's test of asset quality, Republic Bank of Chicago scored 36 out of a possible 40 points, lower than the national average of 37.49 points.

The percentage of problem assets a bank holds compared to its total assets is a helpful indicator of asset quality.As of December 31, 2017, 1.29 percent of Republic Bank 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 keep 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 problem loans can be a useful indicator when evaluating a bank's ability to manage troubled assets. Unfortunately, the FDIC did not provide information on Republic Bank of Chicago'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, increasing its capital cushion, or put them to work addressing problematic loans, potentially making the bank more resilient in tough times. Conversely, losses take away from a bank's ability to do those things.

Republic Bank of Chicago scored 26 out of a possible 30 on Bankrate's test of earnings, better than the national average of 15.12.

One key measure of a bank's earnings is return on equity, or net income (profit, basically) divided by the total amount of equity. The most recent annualized quarterly return on equity for Republic Bank of Chicago was 16.47 percent, above the national average of 8.10 percent.

The bank recorded net income of $32.6 million on total equity of $203.6 million for the twelve months ended December 31, 2017. The bank had an annualized return on average assets, or ROA, of 1.74 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.