Safe and Sound

WCF Financial Bank

Webster City, IA
4
Star Rating
Webster City, IA-based WCF Financial Bank is an FDIC-insured bank started in 1934. Regulatory filings show the bank having equity of $18.9 million on assets of $124.6 million, as of December 31, 2017.

Thanks to the efforts of 24 full-time employees in 2 offices in IA, the bank holds loans and leases worth $68.4 million, $62.7 million of which are for real estate. U.S. bank customers currently have $88.8 million in deposits with the bank.

Overall, Bankrate believes that, as of December 31, 2017, WCF Financial Bank exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Here's an analysis of how the bank fared on the three major criteria Bankrate used to grade U.S. banks.

WHAT IS
SAFE AND SOUND?

Find out

THE INSTITUTION'S SCORE

Capital Score

Capital works as a bulwark against losses and as protection for depositors during times of financial instability for the bank. It follows then that when it comes to measuring an an institution's financial fortitude, capital is useful. From a safety and soundness perspective, the more capital, the better.

On our test to measure the adequacy of a bank's capital, WCF Financial Bank achieved a score of 22 out of a possible 30 points, exceeding the national average of 13.13.

A bank's Tier 1 capital ratio is an essential measure of this buffer. WCF Financial Bank's Tier 1 capital ratio was 34.45 percent, above the 6 percent level considered adequate by regulators, and exceeding the national average of 25.65 percent. A higher capital ratio suggests the bank will be better able to stand up to financial difficulties.

Overall, WCF Financial Bank held equity amounting to 15.17 percent of its assets, which exceeded the national average of 12.03 percent.

Asset Quality Score

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

Having extensive holdings of these kinds of assets means a bank may eventually have to use capital to cover losses, decreasing its cushion 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, diminishing earnings and elevating the risk of a failure in the future.

WCF Financial Bank did better than the national average of 37.49 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 helpful indicator of asset quality.As of December 31, 2017, 1.16 percent of WCF Financial Bank'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 problem assets . Comparing how large that reserve is to the total amount of at-risk loans can be a helpful indicator when evaluating a bank's ability to manage problem assets. Unfortunately, the FDIC did not provide information on WCF Financial Bank's loan loss allowance in its most recent filings.

Earnings score

How profitable a bank is affects its safety and soundness. A bank can retain its earnings, increasing its capital buffer, or use them to deal with problematic loans, potentially making the bank better able to withstand financial shocks. Losses, on the other hand, reduce a bank's ability to do those things.

WCF Financial Bank underperformed the average on Bankrate's test of earnings, achieving a score of 2 out of a possible 30.

Return on equity, calculated by dividing net income (profit, essentially) by total equity, is one key measure of a bank's earnings. WCF Financial Bank's most recent annualized quarterly return on equity was 0.12 percent, below the national average of 8.10 percent.

For the twelve months ended December 31, 2017, the bank earned net income of $23,000 on total equity of $18.9 million. The bank experienced an annualized return on average assets, or ROA, of 0.02 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.