Safe and Sound

NBW BANK

Waupun, WI
5
Star Rating
Founded in 1905, NBW BANK is an FDIC-insured bank based in Waupun, WI. The bank has equity of $17.6 million on assets of $157.9 million, according to December 31, 2017, regulatory filings.

With 29 full-time employees in 4 offices in WI, the bank holds loans and leases worth $111.7 million, including real estate loans of $85.1 million. U.S. bank customers currently have $139.8 million in deposits with the bank.

Overall, Bankrate believes that, as of December 31, 2017, NBW BANK exhibited a superior condition, earning a full 5 stars for safety and soundness. Keep reading for an analysis of how the bank did on the three major 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 a bank's financial fortitude. It works as a buffer against losses and as protection for depositors during times of financial instability for the bank. From a safety and soundness perspective, the higher the capital, the better.

On our test to measure capital adequacy, NBW BANK received a score of 12 out of a possible 30 points, less than the national average of 13.13.

One commonly used measure of this buffer is a bank's Tier 1 capital ratio. NBW BANK's Tier 1 capital ratio was 14.40 percent, higher than the 6 percent level regulators consider adequate, but less than the national average of 25.65 percent. A higher capital ratio suggests the bank will be better able to stand up to financial headwinds.

Overall, NBW BANK held equity amounting to 11.17 percent of its assets, which was lower than the national average of 12.03 percent.

Asset Quality Score

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

A bank with extensive holdings of these types of assets may eventually have to use capital to cover losses, decreasing its equity cushion. Many of those assets are also likely to be in non-accrual status and thus aren't earning interest for the bank, resulting in reduced earnings and potentially more risk of a failure in the future.

NBW BANK scored above the national average of 37.49 on Bankrate's asset quality test, racking up 40 out of a possible 40 points .

A helpful indicator of asset quality is the percentage of problem assets a bank holds compared to its total assets. As of December 31, 2017, 0.87 percent of NBW BANK's loans were noncurrent -- in other words, they were more than 90 days past due or were in non-accrual status. That's below the national average of 1.01 percent.

Banks maintain a reserve known as an "allowance for loan and lease losses" to deal with problem assets . The size of that reserve can be a widely used indicator when evaluating a bank's ability to manage troubled assets, especially when compared to the total amount of problem loans. Unfortunately, the FDIC did not provide information on NBW BANK's loan loss allowance in its most recent filings.

Earnings score

How profitable a bank is affects its long-term survivability. A bank can retain its earnings, increasing its capital buffer, or use them to deal with problematic loans, likely making the bank better able to withstand economic shocks. However, banks that are losing money are less able to do those things.

On Bankrate's test of earnings, NBW BANK scored 18 out of a possible 30, better than the national average of 15.12.

One important measure of a bank's earnings is return on equity, calculated by dividing net income (profit, basically) by total equity. NBW BANK's most recent annualized quarterly return on equity was 9.43 percent, above the national average of 8.10 percent.

The bank recorded net income of $1.6 million on total equity of $17.6 million for the twelve months ended December 31, 2017. The bank had an annualized return on average assets, or ROA, of 1.08 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.