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Illinois Banks: Strongest and Weakest

NEW YORK (TheStreet) -- The "Land of Lincoln" has more banks than any other state, except for Texas, and TheStreet's analysis of fourth quarter data highlights a large group of smaller institutions that are in excellent shape. However, most of the largest banks in the state still haven't returned to solid profitability.

Illinois has had two bank failures so far this year, including Valley Community Bank of St. Charles last Friday and Community First Bank-Chicago , which was shuttered by state regulators in February and sold by the Federal Deposit Insurance Corp. to Northbrook Bank & Trust Co., which is a subsidiary of Wintrust Financial (WTFC).

Illinois had 16 bank failures during 2010, only exceeded by Florida, which had 29 and Georgia, which had 21 bank closures. .

According to data provided by SNL Financial, nine of the 605 banks and thrifts headquartered in Illinois - excluding the two that have failed this quarter - were undercapitalized per ordinary regulatory guidelines as of December 31 and were included on TheStreet's fourth-quarter Bank Watch List.

Since the Watch List is based solely on capital ratios, we take a different approach on our quarterly coverage of banks in key states, by looking at overall credit quality to identify troubled institutions.

Illinois Banks with Weakest Asset Quality

The following list includes all banks in the state with nonperforming assets comprising more than 15% of total assets:

Nonperforming assets (NPA) include nonaccrual loans, loans past due 90 days or more and repossessed assets. Government-guaranteed loan balances are excluded

The list also includes financial strength ratings provided by Weiss Ratings. Weiss Ratings uses a very conservative ratings model, placing the greatest weight on capital strength, credit quality and earnings stability to assign ratings ranging from A-plus (Excellent) to E-minus (Very Weak).

The Illinois bank with the highest level of nonperforming assets as of December 31 was Builders Bank of Chicago, which had an NPA ratio of 39.27%. The institution's holding company Builders Financial filed for chapter 11 bankruptcy protection in November.

Largest Illinois Banks

Here are the 10 largest Illinois banks, along with key metrics as of December 31:

The largest bank chartered in Illinois is Northern Trust Company, the main subsidiary of Northern Trust Corp. (NTRS). The bank subsidiary earned $131.8 million during the fourth quarter, for a return on average assets (ROA) of 0.79%. With credit costs declining, the bank's earnings were boosted as it transferred $4.8 million out of loan loss reserves during the fourth-quarter. Net charge-offs - loan losses less recoveries - totaled $8.7 million, making a total reserve release of $13.5 million. Based on third-quarter financial reports, Weiss assigned a B rating to Northern Trust, which was the highest among the 19 largest Illinois banks.

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