Safe and Sound

The Middlefield Banking Company

Middlefield, OH
4
Star Rating
Middlefield, OH-based The Middlefield Banking Company is an FDIC-insured bank started in 1902. As of December 31, 2017, the bank held equity of $119.9 million on assets of $1.11 billion.

Thanks to the efforts of 210 full-time employees in 14 offices in OH, the bank holds loans and leases worth $916.5 million, $803.6 million of which are for real estate. The bank currently holds $881.1 million in deposits from U.S. customers.

Overall, Bankrate believes that, as of December 31, 2017, The Middlefield Banking Company exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Keep reading for a breakdown of how the bank did on the three major criteria Bankrate used to evaluate American banks.

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THE INSTITUTION'S SCORE

Capital Score

Capital is a useful measurement of an institution's financial fortitude. It works as a buffer against losses and as protection for accountholders during times of financial trouble for the bank. When looking at safety and soundness, the more capital, the better.

The Middlefield Banking Company fell below the national average of 13.13 on our test to measure capital adequacy, achieving 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. The Middlefield Banking Company's Tier 1 capital ratio was 10.88 percent, above the 6 percent level regulators consider adequate, but lower than the national average of 25.65 percent. The higher the capital ratio, the better the bank will be able to weather financial downturns.

Overall, The Middlefield Banking Company held equity amounting to 10.84 percent of its assets, which was lower than the national average of 12.03 percent.

Asset Quality Score

This test's purpose is to try to understand how the bank's capitalization and allocated loan loss reserves could be affected by troubled assets, such as past-due loans.

Having extensive holdings of these kinds of assets suggests a bank may eventually have to use capital to cover losses, diminishing 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 depressed earnings and potentially more risk of a failure in the future.

On Bankrate's test of asset quality, The Middlefield Banking Company scored 36 out of a possible 40 points, falling short of the national average of 37.49 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, 0.91 percent of The Middlefield Banking Company's loans were noncurrent -- in other words, 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 known as an "allowance for loan and lease losses" to deal with troubled assets . How large that reserve is can be a widely used indicator when evaluating a bank's ability to manage problem assets, especially when compared to the total amount of at-risk loans. Unfortunately, the FDIC did not provide information on The Middlefield Banking Company's loan loss allowance in its most recent filings.

Earnings score

How profitable a bank is affects its safety and soundness. Earnings may be retained by the bank, increasing its capital cushion, or be used to deal with problematic loans, potentially making the bank better able to withstand financial shocks. Losses, on the other hand, reduce a bank's ability to do those things.

On Bankrate's earnings test, The Middlefield Banking Company scored 18 out of a possible 30, above the national average of 15.12.

One key measure of a bank's earnings is return on equity, calculated by dividing net income (essentially profit) by total equity. The most recent annualized quarterly return on equity for The Middlefield Banking Company was 9.93 percent, above the national average of 8.10 percent.

For the twelve months ended December 31, 2017, the bank recorded net income of $10.8 million on total equity of $119.9 million. The bank reported an annualized return on average assets, or ROA, of 1.05 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.