Safe and Sound

Sunset Bank & Savings

Waukesha, WI
2
Star Rating
Sunset Bank & Savings is a Waukesha, WI-based, FDIC-insured bank that opened its doors in 1999. As of December 31, 2017, the bank had equity of $15.4 million on $127.3 million in assets.

With 28 full-time employees in 2 offices in WI, the bank currently holds loans and leases worth $93.3 million, including real estate loans of $85.7 million. U.S. bank customers currently have $108.5 million in deposits with the bank.

Overall, Bankrate believes that, as of December 31, 2017, Sunset Bank & Savings exhibited a below-average condition, earning 2 out of 5 stars for safety and soundness. Keep reading for an analysis of how the bank fared on the three important criteria Bankrate used to grade American banks.

WHAT IS
SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

Capital is a crucial measurement of a bank's financial strength. It acts as a buffer against losses and affords protection for accountholders during times of financial trouble for the bank. From a safety and soundness perspective, the more capital, the better.

Sunset Bank & Savings achieved a score of 16 out of a possible 30 points on our test to measure capital adequacy, beating out the national average of 13.13.

A bank's Tier 1 capital ratio is a widely used measure of this buffer. Sunset Bank & Savings's Tier 1 capital ratio was 15.75 percent, above the 6 percent level considered adequate by regulators, but below the national average of 25.65 percent. A higher capital ratio means the bank will be better able to weather financial difficulties.

Overall, Sunset Bank & Savings held equity amounting to 12.06 percent of its assets, which exceeded the national average of 12.03 percent.

Asset Quality Score

In this test, Bankrate tries to estimate the effect of problem assets, such as past-due mortgages, on the bank's loan loss reserves and overall capitalization.

A bank with extensive holdings of these kinds of assets could eventually be required to use capital to absorb losses, reducing 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.

On Bankrate's asset quality test, Sunset Bank & Savings scored 24 out of a possible 40 points, 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, 2.96 percent of Sunset Bank & Savings's loans were noncurrent, meaning 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 known as an "allowance for loan and lease losses" to deal with troubled assets . Comparing the reserve's size to the total amount of problematic loans can be a handy indicator when evaluating a bank's ability to manage problem assets. Unfortunately, the FDIC did not provide information on Sunset Bank & Savings's loan loss allowance in its most recent filings.

Earnings score

A bank's profitability has an effect on its safety and soundness. Earnings can be retained by the bank, boosting its capital cushion, or be used to deal with problematic loans, potentially making the bank better prepared to withstand economic trouble. Obviously, banks that are losing money are less able to do those things.

Sunset Bank & Savings scored 0 out of a possible 30 on Bankrate's earnings test, less than the national average of 15.12.

One important measure of a bank's earnings is return on equity, or net income (profit, essentially) divided by total equity. The most recent annualized quarterly return on equity for Sunset Bank & Savings was -2.21 percent, below the national average of 8.10 percent.

For the twelve months ended December 31, 2017, the bank earned net income of $-350,000 on total equity of $15.4 million. The bank experienced an annualized return on average assets, or ROA, of -0.27 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.