New and former CEOs of Middlefield Banking Co. discuss the future of the bank amid a leadership transition

Effective April 1, after 35 years with the company, including 22 as CEO, Thomas Caldwell officially retired from Middlefield Banc Corp.

James Heslop II, another community banking veteran who has served the company since 1996, including since 2000 as chief operating officer.

Crain sat down with Caldwell and Heslop just before Caldwell’s retirement to talk about their careers, the leadership transition, the bank’s current situation and its future. Here’s what they had to say.

Jeremy Nobile (This conversation has been edited and condensed for length.)

Q: How about a brief state of the union on Middlefield?

Calwell: We ended 2021 with record profits. I think the bank is extremely strong financially and the future is bright. And I think Jim’s taking over makes for a smooth transition, not only for the staff but also for the bank itself. We share the same thoughts, ideas and philosophies about culture and how the bank should be run. So I feel very confident in Jim.

Heslop: We are optimistic for 2022 as we believe the local economy is very strong. We look forward to generating consistent balance sheet and income statement growth. Really, the primary focus for me will be to work with the leadership team that we have here to drive sustainable revenue growth.

Q: Tom, when you look back on your career, what are you particularly proud of?

VS : What I’m probably most proud of here at Middlefield is that over all these years, with all the changes in technology, financial crisis, competition and other challenges, we have always stayed true to our mission. . We always take care of our customers and the communities we serve, and we have provided an excellent working environment for our employees. I know a person here started out as a janitor cleaning floors, and now he’s one of our top commercial lenders. That’s the kind of environment we’ve created. And I think over the years we’ve delivered great shareholder returns. But the fact that we have stayed true to our mission is what I am most proud of.

Q: You also rose through the ranks of the bank, didn’t you?

VS : Yes. I was going to school and joined the bank to earn some extra money. Something Jim and I have in common is that we both started out as cashiers. I started doing other things around the bank, one thing leading to another, and I never left. It was in the fall of 1975. So I fell into it, but I discovered that I was rather into it. When there were opportunities to move, I took advantage of them. What I liked the most in the bank, and which I left later in my career, was the interaction with the customers and their help. Especially when it came to granting loans to customers. Watching these people bring their own children to do some banking later on was rewarding.

Q: And how old are you both?

VS : 64.

H: 68.

Q: So what made you pull the trigger on retirement, Tom?

VS : The short story is, I never planned on being the person they had to walk in and out of the office. There are a lot of sacrifices you make with your time when you’re in that kind of position. It was partly my fault. I thought I couldn’t take the time, but looking back, I probably could have. I’ve seen too many people hang on too long; they go out and then they’re not there very long. I leave at a time when I feel pretty good and I want to go out and have fun.

Q: You are also leaving the board. A lot of people in your position would probably hang out there.

VS : It was a tough decision. This industry has been my life for 46 years. But I felt that if I stayed on the board, I wouldn’t feel like I was truly retired. And I didn’t want to be seen as the guy looking over the shoulder of the next guy. I just wanted a clean break.

Q: Jim, you are obviously more than qualified for this position. However, some might criticize the bank’s decision not to place someone younger at CEO level. Has this been considered?

H: You are not the first person to talk about it. It is not common for the successor to be older than the retiree. The board went through its process, and Tom and I weren’t part of it. They engaged external consultants and reviewed internal and external candidates. The board wanted a clean transition and continue what Tom has been doing all these years. And I can say that I have no retirement plans at this point.

Q: How do you see the bank growing from here?

H: We’ve had good growth over the years, although in 2019, 2020, 2021, balance sheet growth hasn’t been that strong. There are several reasons for this – while we had strong earnings last year, we also took heavy loan loss provisions due to the COVID uncertainty in the market. I can’t wait to get back to where we were in 2018. I had to go back this far. But we do have some key market segments in central Ohio and northeast Ohio, from Summit and Cuyahoga counties to Lake County. I think if we focus on those and properly portray our brand while maintaining fiscal conservatism, I think we get strong results.

VS : To stand out from the competition, it will all be a question of relationships. Banks offer the same products and services, but the way they are offered is what distinguishes community banks from large national banks.

Q: Is Middlefield considering any acquisitions? Or is it too difficult right now with the state of the bank’s shares?

H: We haven’t made a deal since Liberty Bank in 2017. I hate to go that route, but it’s an honest statement: the trading multiple of our stock, we’re working on it. We work with a good investor relations firm, which we hope will invigorate us and get stocks out to trade reasonably well. This will give us opportunities.

However, we realize that there are other opportunities along these lines that we could potentially capitalize on. And there are similar institutions in Ohio with older management teams that may not have a succession plan. We will therefore continue to seek out these opportunities.

Q: The company has obviously been pressured by at least one activist shareholder, Ancora, to expand or sell the bank. Did you follow a sales process? Or are you totally committed to independence?

H: We all know that any company in this country can sell any day at a premium, and there will always be shareholders who want to see that premium and who don’t care about the true value of the organization but focus on my back in my pocket today. I can say that the board, especially over the past 10 years, has focused on its fiduciary responsibilities. There are opportunities to sell or consider a merger of equals. The board regularly reviews an analysis of sale value and what we might achieve if we were to sell today. What I can say is that with great determination, insight and external advisors, we are looking at all of our opportunities.

VS : If you’re a short-term investor, the return probably hasn’t been as great as a shareholder who’s been with that bank for 20 years. These people see it as a great investment. Shareholders are an important constituency, and I like to think we’ve taken good care of them. But selling the bank to get a quick bounty — I have to wonder what impact that has on the community and our staff. I think the opportunity for Middlefield right now is to stay independent and seek out strategic acquisitions while working to promote the stock as a good investment.

Q: And what are your thoughts on other headwinds or headwinds to growth today?

VS : Economic conditions are going to have a lot of impact on the financial services industry in the future. We just had a rate hike, and depending on who you listen to, there could be between one and five more by the end of the year, which could have a negative impact on growth. And we’re always looking at inflationary pressures, gas prices that impact everybody. We are now considering a tax rate increase proposal that would increase the corporate tax rate. All of these things are headwinds to manage.

H: But, according to my previous reference, we still remain optimistic for 2020. Our local economies are strong. Unemployment is down in Ohio and nationally, and individual businesses in the market have an opportunity to do more business, but we still can’t find enough workers or enough people willing to work. . So there is some uncertainty.