Safe and Sound

Midwest Bank National Association

Pierce, NE
5
Star Rating
Pierce, NE-based Midwest Bank National Association is an FDIC-insured bank founded in 1882. The bank has equity of $82.4 million on $703.4 million in assets, according to December 31, 2017, regulatory filings.

U.S. bank customers have $583.7 million on deposit at 10 offices in NE run by 135 full-time employees. With that footprint, the bank holds loans and leases worth $534.3 million, $290.2 million of which are for real estate.

Overall, Bankrate believes that, as of December 31, 2017, Midwest Bank National Association exhibited a superior condition, earning a full 5 stars for safety and soundness. Here's an analysis of how the bank fared on the three key criteria Bankrate used to evaluate American banks on safety and soundness.

WHAT IS
SAFE AND SOUND?

Find out

THE INSTITUTION'S SCORE

Capital Score

Capital is a valuable measurement of an institution's financial fortitude. It works as a buffer against losses and provides protection for depositors when a bank is experiencing economic trouble. When looking at safety and soundness, the more capital, the better.

On our test to measure capital adequacy, Midwest Bank National Association racked up 14 out of a possible 30 points, beating the national average of 13.13.

A bank's Tier 1 capital ratio is an essential measure of this buffer. Midwest Bank National Association's Tier 1 capital ratio was 13.93 percent, above the 6 percent level regulators consider adequate, but under the national average of 25.65 percent. The higher the capital ratio, the better the bank will be able to weather financial difficulties.

Overall, Midwest Bank National Association held equity amounting to 11.72 percent of its assets, which was lower than the national average of 12.03 percent.

Asset Quality Score

In this test, Bankrate tries to determine the effect of problem assets, such as unpaid mortgages, on the bank's capitalization and allocated loan loss reserves.

Having a large number of these types of assets means a bank could have to use capital to absorb losses, reducing its equity buffer. Many of those assets are also likely to be in non-accrual status and no longer earning interest for the bank, pushing down earnings and increasing the risk of a future failure.

Midwest Bank National Association exceeded the national average of 37.49 on Bankrate's test of asset quality, racking up 40 out of a possible 40 points .

The percentage of problem assets a bank holds compared to its total assets is a widely used indicator of asset quality.As of December 31, 2017, 0.34 percent of Midwest Bank National Association'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 1.01 percent.

Banks keep a reserve to handle troubled assets known as an "allowance for loan and lease losses." That reserve's size can be a helpful indicator when evaluating a bank's ability to manage troubled assets, especially when compared to the total amount of problematic loans. Unfortunately, the FDIC did not provide information on Midwest Bank National 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. Earnings may be retained by the bank, increasing its capital buffer, or be used to address problematic loans, likely making the bank more resilient in times of trouble. Conversely, losses lessen a bank's ability to do those things.

Midwest Bank National Association scored 18 out of a possible 30 on Bankrate's test of earnings, beating the national average of 15.12.

One important measure of a bank's earnings is return on equity, or net income (profit, basically) divided by the total amount of equity. The most recent annualized quarterly return on equity for Midwest Bank National Association was 9.38 percent, above the national average of 8.10 percent.

The bank recorded net income of $7.4 million on total equity of $82.4 million for the twelve months ended December 31, 2017. The bank reported an annualized return on average assets, or ROA, of 1.10 percent, above the 1 percent deemed satisfactory in accordance with industry standards, and above 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.