Safe and Sound

Northwestern Mutual Wealth Management

Milwaukee, WI
5
Star Rating
Northwestern Mutual Wealth Management is a Milwaukee, WI-based, FDIC-insured bank that opened its doors in 2001. The bank has equity of $154.0 million on assets of $251.7 million, according to December 31, 2017, regulatory filings.

With 106 full-time employees, the bank has amassed loans and leases worth $0, including real estate loans of $0. U.S. bank customers currently have $50.5 million in deposits with the bank.

Overall, Bankrate believes that, as of December 31, 2017, Northwestern Mutual Wealth Management exhibited a superior condition, earning a full 5 stars for safety and soundness. Keep reading for a look at how the bank fared on the three key criteria Bankrate used to evaluate American banks on safety and soundness.

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THE INSTITUTION'S SCORE

Capital Score

When it comes to measuring an a bank's financial resilience, capital is essential. It acts as a buffer against losses and as protection for depositors when a bank is struggling financially. When it comes to safety and soundness, more capital is better.

Northwestern Mutual Wealth Management did better than the national average of 13.13 points on our test to measure the adequacy of a bank's capital, receiving a score of 30 out of a possible 30 points.

One way to measure this buffer is looking at a bank's Tier 1 capital ratio. Northwestern Mutual Wealth Management's Tier 1 capital ratio was 233.35 percent, above the 6 percent level considered adequate by regulators, and exceeding the national average of 25.65 percent. The higher the capital ratio, the better the bank will be able to stand up to economic difficulties.

Overall, Northwestern Mutual Wealth Management held equity amounting to 61.17 percent of its assets, which exceeded the national average of 12.03 percent.

Asset Quality Score

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

Having lots of these kinds of assets could eventually force a bank to use capital to cover losses, shrinking its cushion of equity. Many of those assets are also likely to be in non-accrual status and thus aren't earning money, resulting in depressed earnings and potentially more risk of a failure in the future.

Northwestern Mutual Wealth Management scored 40 out of a possible 40 points on Bankrate's test of asset quality, above the national average of 37.49.

The percentage of problem assets a bank holds compared to its total assets is a widely used indicator of asset quality.

Banks keep a reserve to handle troubled assets known as an "allowance for loan and lease losses." The size of that reserve can be a helpful indicator when evaluating a bank's ability to manage problem assets, especially when compared to the total amount of at-risk loans. Unfortunately, the FDIC did not provide information on Northwestern Mutual Wealth Management's loan loss allowance in its most recent filings.

Earnings score

A bank's ability to earn money affects its safety and soundness. A bank can retain its earnings, boosting its capital cushion, or put them to work addressing problematic loans, likely making the bank better prepared to withstand financial trouble. Obviously, banks that are losing money are less able to do those things.

Northwestern Mutual Wealth Management did above-average on Bankrate's test of earnings, achieving a score of 30 out of a possible 30.

Return on equity, calculated by dividing net income (profit, basically) by the total amount of equity, is one widely used measure of a bank's earnings. The most recent annualized quarterly return on equity for Northwestern Mutual Wealth Management was 28.32 percent, above the national average of 8.10 percent.

The bank earned net income of $39.4 million on total equity of $154.0 million for the twelve months ended December 31, 2017. The bank had an annualized return on average assets, or ROA, of 17.65 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.