Safe and Sound

The Leaders Bank

Oak Brook, IL
2
Star Rating
Started in 2000, The Leaders Bank is an FDIC-insured bank based in Oak Brook, IL. As of December 31, 2017, the bank had equity of $39.3 million on $329.3 million in assets.

With 37 full-time employees in 2 offices in IL, the bank currently holds loans and leases worth $267.6 million, including real estate loans of $213.3 million. U.S. bank customers currently have $271.4 million in deposits with the bank.

Overall, Bankrate believes that, as of December 31, 2017, The Leaders Bank exhibited a below-average condition, earning 2 out of 5 stars for safety and soundness. Keep reading for an analysis of how the bank fared on the three important criteria Bankrate used to evaluate American banks.

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THE INSTITUTION'S SCORE

Capital Score

Capital is an essential measurement of a bank's financial strength. It works as a bulwark against losses and affords protection for depositors when a bank is experiencing economic instability. From a safety and soundness perspective, more capital is preferred.

The Leaders Bank achieved a score of 14 out of a possible 30 points on our test to measure capital adequacy, better than the national average of 13.13.

A bank's Tier 1 capital ratio is an essential measure of this buffer. The Leaders Bank's Tier 1 capital ratio was 8.31 percent, above the 6 percent level considered adequate by regulators, but lower than the national average of 25.65 percent. A higher capital ratio suggests the bank will be better able to weather economic difficulties.

Overall, The Leaders Bank held equity amounting to 11.93 percent of its assets, which was lower than the national average of 12.03 percent.

Asset Quality Score

In this test, Bankrate tries to estimate the effect of troubled assets, such as past-due mortgages, on the bank's loan loss reserves and overall capitalization.

Having extensive holdings of these kinds of assets suggests a bank may eventually have to use capital to absorb losses, cutting down on its equity cushion. Many of those assets are also likely to be in non-accrual status and thus aren't earning money, decreasing earnings and elevating the chances of a future failure.

On Bankrate's asset quality test, The Leaders Bank scored 24 out of a possible 40 points, lower than 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, 1.40 percent of The Leaders Bank's loans were noncurrent, meaning 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 to handle problem assets known as an "allowance for loan and lease losses." That reserve's size can be a useful indicator when evaluating a bank's ability to manage troubled assets, especially when compared to the total amount of problematic loans. Unfortunately, the FDIC did not provide information on The Leaders Bank's loan loss allowance in its most recent filings.

Earnings score

How profitable a bank is has an effect on its long-term survivability. Earnings can be retained by the bank, boosting its capital cushion, or be used to deal with problematic loans, potentially making the bank better prepared to withstand financial shocks. Losses, on the other hand, lessen a bank's ability to do those things.

On Bankrate's test of earnings, The Leaders Bank scored 0 out of a possible 30, lower than the national average of 15.12.

One important measure of a bank's earnings is return on equity, or net income (profit, basically) divided by total equity. The most recent annualized quarterly return on equity for The Leaders Bank was -4.03 percent, below the national average of 8.10 percent.

The bank reported net income of $-1.7 million on total equity of $39.3 million for the twelve months ended December 31, 2017. The bank had an annualized return on average assets, or ROA, of -0.51 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.