Safe and Sound

Wells Fargo Bank, Ltd.

Los Angeles, CA
5
Star Rating
Started in 1985, Wells Fargo Bank, Ltd. is an FDIC-insured bank based in Los Angeles, CA. Regulatory filings show the bank having equity of $596.9 million on assets of $829.6 million, as of December 31, 2017.

With 494 full-time employees, the bank holds loans and leases worth $0, including real estate loans of $0. U.S. bank customers currently have $17.5 million in deposits with the bank.

Overall, Bankrate believes that, as of December 31, 2017, Wells Fargo Bank, Ltd. exhibited a superior condition, earning a full 5 stars for safety and soundness. Keep reading for a breakdown of how the bank fared on the three key criteria Bankrate used to evaluate U.S. banks on safety and soundness.

WHAT IS
SAFE AND SOUND?

Find out

THE INSTITUTION'S SCORE

Capital Score

Capital works as a bulwark against losses and as protection for account holders when a bank is struggling financially. Therefore, when it comes to measuring an an institution's financial strength, capital is essential. When looking at safety and soundness, the more capital, the better.

Wells Fargo Bank, Ltd. racked up 30 out of a possible 30 points on our test to measure the adequacy of a bank's capital, beating the national average of 13.13.

A bank's Tier 1 capital ratio is an essential measure of this buffer. Wells Fargo Bank, Ltd.'s Tier 1 capital ratio was 39.81 percent, above the 6 percent level regulators consider adequate, and exceeding the national average of 25.65 percent. A higher capital ratio suggests the bank will be better able to stand up to economic challenges.

Overall, Wells Fargo Bank, Ltd. held equity amounting to 71.95 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 capitalization and allocated loan loss reserves could be affected by problem assets, such as unpaid mortgages.

A bank with a large number of these types of assets could eventually be forced to use capital to cover 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 reduced earnings and potentially more risk of a future failure.

Wells Fargo Bank, Ltd. scored 40 out of a possible 40 points on Bankrate's asset quality test, beating the national average of 37.49.

A handy indicator of asset quality is the percentage of problem assets a bank holds compared to its total assets.

Banks keep a reserve to deal with problem assets known as an "allowance for loan and lease losses." How large that reserve is can be a useful indicator when evaluating a bank's ability to manage troubled assets, especially when compared to the total amount of at-risk loans. Unfortunately, the FDIC did not provide information on Wells Fargo Bank, Ltd.'s loan loss allowance in its most recent filings.

Earnings score

How profitable a bank is affects its safety and soundness. Earnings can be retained by the bank, increasing its capital buffer, or be used to deal with problematic loans, likely making the bank more resilient in tough times. Conversely, losses lessen a bank's ability to do those things.

Wells Fargo Bank, Ltd. scored 2 out of a possible 30 on Bankrate's earnings test, less than the national average of 15.12.

One widely used measure of a bank's earnings is return on equity, calculated by dividing net income (profit, essentially) by the total amount of equity. The most recent annualized quarterly return on equity for Wells Fargo Bank, Ltd. was 0.68 percent, below the national average of 8.10 percent.

For the twelve months ended December 31, 2017, the bank reported net income of $4.0 million on total equity of $596.9 million. The bank reported an annualized return on average assets, or ROA, of 0.53 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.