Safe and Sound

Great Midwest Bank, S.S.B.

Brookfield, WI
4
Star Rating
Great Midwest Bank, S.S.B. is a Brookfield, WI-based, FDIC-insured bank founded in 1936. Regulatory filings show the bank having equity of $116.6 million on assets of $738.7 million, as of December 31, 2017.

U.S. bank customers have $496.9 million on deposit at 9 offices in WI run by 92 full-time employees. With that footprint, the bank currently holds loans and leases worth $642.1 million, including $644.6 million worth of real estate loans.

Overall, Bankrate believes that, as of December 31, 2017, Great Midwest Bank, S.S.B. exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Here's an analysis of how the bank did on the three key criteria Bankrate used to grade American banks.

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THE INSTITUTION'S SCORE

Capital Score

Capital is a useful measurement of a bank's financial fortitude. It acts as a buffer against losses and as protection for accountholders when a bank is struggling financially. From a safety and soundness perspective, the more capital, the better.

Great Midwest Bank, S.S.B. did better than the national average of 13.13 points on our test to measure the adequacy of a bank's capital, racking up 22 out of a possible 30 points.

One commonly used measure of this buffer is a bank's Tier 1 capital ratio. Great Midwest Bank, S.S.B.'s Tier 1 capital ratio was 20.46 percent, higher than 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 financial headwinds.

Overall, Great Midwest Bank, S.S.B. held equity amounting to 15.79 percent of its assets, which exceeded the national average of 12.03 percent.

Asset Quality Score

This test's purpose is to estimate how the bank's loan loss reserves and overall capitalization could be affected by problem assets, such as past-due mortgages.

Having large numbers of these types of assets suggests a bank may eventually have to use capital to absorb losses, reducing its buffer of equity. 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, resulting in diminished earnings and potentially more risk of a future failure.

On Bankrate's asset quality test, Great Midwest Bank, S.S.B. scored 36 out of a possible 40 points, coming in below 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, 1.28 percent of Great Midwest Bank, S.S.B.'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 maintain a reserve to handle troubled assets known as an "allowance for loan and lease losses." Comparing the size of that reserve to the total amount of at-risk loans can be a handy indicator when evaluating a bank's ability to manage problem assets. Unfortunately, the FDIC did not provide information on Great Midwest Bank, S.S.B.'s loan loss allowance in its most recent filings.

Earnings score

A bank's ability to earn money has an effect on its safety and soundness. A bank can retain its earnings, increasing its capital cushion, or use them to address problematic loans, likely making the bank better prepared to withstand economic shocks. Conversely, losses reduce a bank's ability to do those things.

On Bankrate's earnings test, Great Midwest Bank, S.S.B. scored 8 out of a possible 30, failing to reach the national average of 15.12.

Return on equity, calculated by dividing net income (essentially, profit) by the total amount of equity, is one important way to measure a bank's earnings. Great Midwest Bank, S.S.B.'s most recent annualized quarterly return on equity was 3.76 percent, below the national average of 8.10 percent.

The bank recorded net income of $4.3 million on total equity of $116.6 million for the twelve months ended December 31, 2017. The bank had an annualized return on average assets, or ROA, of 0.61 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.