Safe and Sound

Wolverine Bank, Federal Savings Bank

Midland, MI
5
Star Rating
Founded in 1933, Wolverine Bank, Federal Savings Bank is an FDIC-insured bank headquartered in Midland, MI. As of June 30, 2017, the bank had equity of $63.9 million on $386,203,000 in assets.

U.S. bank customers have $265.7 million on deposit at 3 offices in MI run by 52 full-time employees. With that footprint, the bank holds loans and leases worth $313.0 million, including $305.7 million worth of real estate loans.

Overall, Bankrate believes that, as of June 30, 2017, Wolverine Bank, Federal Savings Bank exhibited a superior condition, earning a full 5 stars for safety and soundness. Keep reading for a breakdown of how the bank did on the three major criteria Bankrate used to grade U.S. banks on safety and soundness.

WHAT IS
SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

Capital is a valuable measurement of a bank's financial strength. It works as a bulwark against losses and provides protection for depositors when a bank is experiencing economic instability. When it comes to safety and soundness, the more capital, the better.
On our test to measure capital adequacy, Wolverine Bank, Federal Savings Bank scored 22 out of a possible 30 points, exceeding the national average of 13.38.

One widely followed measure of this buffer is a bank's Tier 1 capital ratio. Wolverine Bank, Federal Savings Bank's Tier 1 capital ratio was 21.03 percent, higher than the 6 percent level considered adequate by regulators, but lower than the national average of 25.16 percent. The higher the capital ratio, the better the bank will be able to stand up to economic challenges.

Overall, Wolverine Bank, Federal Savings Bank held equity amounting to 16.54 percent of its assets, which exceeded the national average of 12.10 percent.

Asset Quality Score

This test's purpose is to try to understand how the bank's reserves set aside to cover loan losses, as well as overall capitalization could be affected by troubled assets, such as unpaid loans.

A bank with large numbers of these types of assets may eventually be required to use capital to cover losses, shrinking its equity cushion. Many of those assets are also likely to be in non-accrual status and no longer earning money, decreasing earnings and increasing the chances of a future failure.

Wolverine Bank, Federal Savings Bank exceeded 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, 1.39 percent of Wolverine Bank, Federal Savings 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 1.04 percent.

Banks maintain a reserve known as an "allowance for loan and lease losses" to deal with problem assets . Comparing the how large that reserve is 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 Wolverine Bank, Federal Savings Bank's loan loss allowance in its most recent filings.

Earnings score

How profitable a bank is affects its long-term survivability. A bank can retain its earnings, boosting its capital buffer, or put them to work addressing problematic loans, potentially making the bank more resilient in times of trouble. Banks that are losing money, however, are less able to do those things.

On Bankrate's earnings test, Wolverine Bank, Federal Savings Bank scored 20 out of a possible 30, beating out the national average of 16.52.

One key measure of a bank's earnings is return on equity, or net income (essentially profit) divided by the total amount of equity. Wolverine Bank, Federal Savings Bank's most recent annualized quarterly return on equity was 8.09 percent, below the national average of 9.28 percent.

The bank recorded net income of $2.5 million on total equity of $63.9 million for the twelve months ended June 30, 2017. The bank had an annualized return on average assets, or ROA, of 1.26 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.