Safe and Sound

Wells Fargo Financial National Bank

Las Vegas, NV
5
Star Rating
Founded in 1988, Wells Fargo Financial National Bank is an FDIC-insured bank based in Las Vegas, NV. As of June 30, 2017, the bank held equity of $1.39 billion on $8,569,455,000 in assets.

Thanks to the efforts of 485 full-time employees, the bank has amassed loans and leases worth $336,000, $336,000 of which are for real estate. U.S. bank customers currently have $7.04 billion in deposits with the bank.

Overall, Bankrate believes that, as of June 30, 2017, Wells Fargo Financial National Bank exhibited a superior condition, earning a full 5 stars for safety and soundness. Here's an analysis of how the bank did on the three key criteria Bankrate used to score U.S. banks on safety and soundness.

WHAT IS
SAFE AND SOUND?

Find out

THE INSTITUTION'S SCORE

Capital Score

Capital acts as a bulwark against losses and provides protection for depositors during periods of financial trouble for the bank. It follows then that a bank's level of capital is an essential measurement of a bank's financial resilience. When looking at safety and soundness, more capital is preferred.
Wells Fargo Financial National Bank beat out the national average of 13.38 points on our test to measure the adequacy of a bank's capital, racking up 24 out of a possible 30 points.

One way to measure this buffer is looking at a bank's Tier 1 capital ratio. Wells Fargo Financial National Bank's Tier 1 capital ratio was 13.73 percent, above the 6 percent level regulators consider adequate, but below the national average of 25.16 percent. The higher the capital ratio, the better the bank will be able to stand up to financial headwinds.

Overall, Wells Fargo Financial National Bank held equity amounting to 16.20 percent of its assets, which exceeded the national average of 12.10 percent.

Asset Quality Score

Bankrate uses this test to determine the effect of problem assets, such as unpaid mortgages, on the bank's reserves set aside to cover loan losses, as well as overall capitalization.

A bank with lots of these types of assets may eventually have to use capital to cover losses, decreasing its equity cushion. It also means that there are likely to be many assets that are in non-accrual status and no longer earning interest for the bank, pushing down earnings and increasing the risk of a future failure.

Wells Fargo Financial National Bank beat out the national average of 37.62 on Bankrate's asset quality test, racking up 40 out of a possible 40 points .

A handy indicator of asset quality is the percentage of problem assets a bank holds compared to its total assets. As of June 30, 2017, none of Wells Fargo Financial National Bank's loans were noncurrent, meaning they were more than 90 days past due or were in non-accrual status. That's below the national average of 1.04 percent.

Banks keep a reserve to deal with problem assets known as an "allowance for loan and lease losses." Comparing the the size of that reserve to the total amount of problematic loans can be a useful indicator when evaluating a bank's ability to manage troubled assets. Unfortunately, the FDIC did not provide information on Wells Fargo Financial National 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 cushion, or put them to work addressing problematic loans, potentially making the bank better prepared to withstand economic trouble. Conversely, losses take away from a bank's ability to do those things.

Wells Fargo Financial National Bank outperformed the average on Bankrate's earnings test, achieving a score of 30 out of a possible 30.

Return on equity, calculated by dividing net income (profit, essentially) by the total amount of equity, is one important way to measure a bank's earnings. The most recent annualized quarterly return on equity for Wells Fargo Financial National Bank was 56.38 percent, above the national average of 9.28 percent.

The bank recorded net income of $334.2 million on total equity of $1.39 billion for the twelve months ended June 30, 2017. The bank had an annualized return on average assets, or ROA, of 7.52 percent, above the 1 percent deemed satisfactory in accordance with industry standards, and above the average for U.S. banks of 1.14 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.