Safe and Sound

WaterStone Bank, SSB

Wauwatosa, WI
5
Star Rating
WaterStone Bank, SSB is a Wauwatosa, WI-based, FDIC-insured bank dating back to 1921. As of June 30, 2017, the bank had equity of $384.2 million on $1,880,625,000 in assets.

Thanks to the work of 910 full-time employees in 13 offices in WI, the bank has amassed loans and leases worth $1.41 billion, including real estate loans of $1.40 billion. The bank currently holds $982.2 million in deposits from U.S. customers.

Overall, Bankrate believes that, as of June 30, 2017, WaterStone Bank, SSB exhibited a superior condition, earning a full 5 stars for safety and soundness. Keep reading for a breakdown of how the bank did on the three key criteria Bankrate used to grade U.S. banks on safety and soundness.

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SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

Capital acts as a cushion against losses and affords protection for accountholders during periods of financial trouble for the bank. It follows then that when it comes to measuring an a bank's financial strength, capital is crucial. When looking at safety and soundness, more capital is better.
WaterStone Bank, SSB scored above the national average of 13.38 points on our test to measure capital adequacy, achieving a score of 30 out of a possible 30 points.

A bank's Tier 1 capital ratio is a widely followed measure of this buffer. WaterStone Bank, SSB's Tier 1 capital ratio was 28.26 percent, higher than the 6 percent level considered adequate by regulators, and exceeding the national average of 25.16 percent. A higher capital ratio suggests the bank will be better able to weather economic headwinds.

Overall, WaterStone Bank, SSB held equity amounting to 20.43 percent of its assets, which exceeded the national average of 12.10 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 reserves set aside to cover loan losses, as well as overall capitalization.

A bank with large numbers of these kinds of assets may eventually be forced to use capital to absorb losses, diminishing its equity buffer. Many of those assets are also likely to be in non-accrual status and thus aren't earning money, resulting in lower earnings and potentially more risk of a future failure.

WaterStone Bank, SSB scored above the national average of 37.62 on Bankrate's test of asset quality, racking up 40 out of a possible 40 points .

The percentage of problem assets a bank holds compared to its total assets is a handy indicator of asset quality.As of June 30, 2017, 0.60 percent of WaterStone Bank, SSB's loans were noncurrent, meaning they were more than 90 days past due or were in non-accrual status. That's below the national average of 1.04 percent.

Banks keep a reserve known as an "allowance for loan and lease losses" to deal with problem assets . Comparing the that reserve's size to the total amount of problem loans can be a widely used indicator when evaluating a bank's ability to manage troubled assets. Unfortunately, the FDIC did not provide information on WaterStone Bank, SSB'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, increasing its capital cushion, or be used to address problematic loans, likely making the bank more resilient in times of trouble. Conversely, losses diminish a bank's ability to do those things.

WaterStone Bank, SSB beat the national average on Bankrate's earnings test, achieving a score of 18 out of a possible 30.

One important measure of a bank's earnings is return on equity, calculated by dividing net income (essentially profit) by the total amount of equity. WaterStone Bank, SSB's most recent annualized quarterly return on equity was 8.15 percent, below the national average of 9.28 percent.

For the twelve months ended June 30, 2017, the bank recorded net income of $15.4 million on total equity of $384.2 million. The bank had an annualized return on average assets, or ROA, of 1.72 percent, above the 1 percent deemed satisfactory in accordance with industry standards, and above the average for U.S. banks of 1.14 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.