Safe and Sound

Midland Federal Savings and Loan Association

Bridgeview, IL
2
Star Rating
Bridgeview, IL-based Midland Federal Savings and Loan Association is an FDIC-insured bank founded in 1914. The bank holds equity of $11.0 million on $117.6 million in assets, according to December 31, 2017, regulatory filings.

U.S. bank customers have $106.0 million on deposit at 4 offices in IL run by 34 full-time employees. With that footprint, the bank holds loans and leases worth $48.5 million, $48.5 million of which are for real estate.

Overall, Bankrate believes that, as of December 31, 2017, Midland Federal Savings and Loan Association exhibited a below-average condition, earning 2 out of 5 stars for safety and soundness. Here's a look at how the bank fared on the three important criteria Bankrate used to evaluate U.S. banks.

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THE INSTITUTION'S SCORE

Capital Score

Capital acts as a bulwark against losses and as protection for account holders when a bank is struggling financially. It follows then that when it comes to measuring an a bank's financial resilience, capital is crucial. From a safety and soundness perspective, the more capital, the better.

Midland Federal Savings and Loan Association finished below the national average of 13.13 on our test to measure the adequacy of a bank's capital, receiving a score of 10 out of a possible 30 points.

One way to measure this buffer is looking at a bank's Tier 1 capital ratio. Midland Federal Savings and Loan Association's Tier 1 capital ratio was 30.52 percent, above the 6 percent level regulators consider adequate, and exceeding the national average of 25.65 percent. The higher the capital ratio, the better the bank will be able to weather economic headwinds.

Overall, Midland Federal Savings and Loan Association held equity amounting to 9.37 percent of its assets, which was lower than the national average of 12.03 percent.

Asset Quality Score

Bankrate uses this test to estimate the effect of troubled assets, such as unpaid mortgages, on the bank's capitalization and allocated loan loss reserves.

Having lots of these kinds of assets means a bank could have to use capital to cover losses, shrinking 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, decreasing earnings and elevating the chances of a failure in the future.

Midland Federal Savings and Loan Association finished below the national average of 37.49 on Bankrate's asset quality test, racking up 32 out of a possible 40 points .

The percentage of problem assets a bank holds compared to its total assets is a handy indicator of asset quality.As of December 31, 2017, 4.39 percent of Midland Federal Savings and Loan Association'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 to deal with troubled assets known as an "allowance for loan and lease losses." How large that reserve is can be a helpful indicator when evaluating a bank's ability to manage problem assets, especially when compared to the total amount of problematic loans. Unfortunately, the FDIC did not provide information on Midland Federal Savings and Loan Association's loan loss allowance in its most recent filings.

Earnings score

How profitable a bank is has an effect on 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 better able to withstand economic trouble. Losses, on the other hand, lessen a bank's ability to do those things.

Midland Federal Savings and Loan Association scored 2 out of a possible 30 on Bankrate's test of earnings, coming in below the national average of 15.12.

One important measure of a bank's earnings is return on equity, or net income (profit, essentially) divided by total equity. Midland Federal Savings and Loan Association's most recent annualized quarterly return on equity was 0.79 percent, below the national average of 8.10 percent.

The bank earned net income of $88,000 on total equity of $11.0 million for the twelve months ended December 31, 2017. The bank had an annualized return on average assets, or ROA, of 0.07 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.