Safe and Sound

Main Street Bank

Marlborough, MA
4
Star Rating
Main Street Bank is a Marlborough, MA-based, FDIC-insured bank started in 1860. The bank holds equity of $108.1 million on $992,621,000 in assets, according to June 30, 2017, regulatory filings.

U.S. bank customers have $815.7 million on deposit at 14 offices in MA run by 163 full-time employees. With that footprint, the bank holds loans and leases worth $723.3 million, including real estate loans of $683.7 million.

Overall, Bankrate believes that, as of June 30, 2017, Main Street Bank exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Keep reading for a breakdown of how the bank faired on the three important criteria Bankrate used to score U.S. banks.

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THE INSTITUTION'S SCORE

Capital Score

When it comes to measuring an a bank's financial resilience, capital is valuable. It works as a buffer against losses and provides protection for depositors during periods of economic instability for the bank. When it comes to safety and soundness, the higher the capital, the better.
On our test to measure capital adequacy, Main Street Bank received a score of 12 out of a possible 30 points, below the national average of 13.38.

A bank's Tier 1 capital ratio is an essential measure of this buffer. Main Street Bank's Tier 1 capital ratio was 13.58 percent, exceeding the 6 percent level regulators consider adequate, but lower than the national average of 25.16 percent. A higher capital ratio means the bank will be better able to weather economic challenges.

Overall, Main Street Bank held equity amounting to 10.89 percent of its assets, which was lower than the national average of 12.10 percent.

Asset Quality Score

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

Having lots of these kinds of assets may eventually force a bank to use capital to cover losses, cutting down on its equity buffer. It also means that there are likely to be many assets that are in non-accrual status and no longer earning money, resulting in lower earnings and potentially more risk of a future failure.

Main Street Bank scored 40 out of a possible 40 points on Bankrate's asset quality test, better than the national average of 37.62.

The percentage of problem assets a bank holds compared to its total assets is a widely used indicator of asset quality.As of June 30, 2017, 0.55 percent of Main Street 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 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 problem loans can be a useful indicator when evaluating a bank's ability to manage troubled assets. Unfortunately, the FDIC did not provide information on Main Street Bank's loan loss allowance in its most recent filings.

Earnings score

A bank's ability to earn money affects its long-term survivability. A bank can retain its earnings, expanding its capital buffer, or use them to address problematic loans, likely making the bank better prepared to withstand financial trouble. Conversely, losses take away from a bank's ability to do those things.

On Bankrate's earnings test, Main Street Bank scored 10 out of a possible 30, lower than the national average of 16.52.

One widely used way to measure a bank's earnings is return on equity, calculated by dividing net income (profit, basically) by the total amount of equity. Main Street Bank's most recent annualized quarterly return on equity was 6.95 percent, below the national average of 9.28 percent.

The bank earned net income of $2.7 million on total equity of $108.1 million for the twelve months ended June 30, 2017. The bank reported an annualized return on average assets, or ROA, of 0.78 percent, below the 1 percent deemed satisfactory in accordance with industry standards and below 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.