Bank of Hindman: Overview of the bank

Established in the year 1903 and with its main office located in the city of Hindman which is located in the state of Kentucky, the Bank of Hindman is a relatively small bank that has been operating for 119 years. The bank first got insured by the Federal Deposit Insurance Corporation in the year 1934 which is effectively the first year it was possible to get insured by the agency, which itself was founded in the prior year. The FDIC is also serves as the primary federal regulator for the bank. Mainly because of its relative size, geographic reach and presence, the bank is considered to be a community bank, instead of a national bank. Based on our estimates, we believe its asset base of $273 million ranks it in the 50th percentile of banks in the United States. The Bank of Hindman is primarily a domestic bank and does not at the current time have operations outside of the United States. Domestically, the bank currently has 3 offices. Finally, the bank currently has a total employee base of 29 people.

Overview of the Bank’s Assets and Liabilities

As previously indicated, the bank currently has total assets of $273 million, which makes it a relatively small bank in the United States. The bank also has net loans outstanding to customers of $95 million and a deposit base of $232 million. Domestic deposits currently represent (in terms of total size), 85% of the bank’s total assets, and 100% of the bank’s total deposits outstanding. Within these deposits 72% are insured based on the latest available information. As we look at the composition of the banks assets, as noted earlier the bank is primarily engaged in providing 1-4 family residential loans (mortgages) and commercial & industrial loans to its customers. Overall, customer loans currently make up 35% of the bank’s total assets. The Bank of Hindman has $27 million of outstanding 1-4 family residential loans (mortgages), which in total represents 28% of its loans outstanding. Loans to individuals and loans to commercial and industrial interests represent 3% and 15% of loans outstanding, respectively.

Contact Information For The Bank of Hindman

  • Main Office Address: 1362 Hindman Bypass, Hindman, KY 41822
  • Website: www.bankofhindman.com
  • Total Number of Branches: 3
  • Total Number of International Branches: None
  • Number of Employees: 29
  • FDIC Certificate Number: 289
  • FDIC Community Bank: Yes
  • FDIC Field Office: Lexington
  • Independent or Subsidiary Bank: Independent
  • Federal Reserve ID Number: 763211
  • Bank Charter Class: NM
  • Primary Regulator: FDIC

Financial Overview

bank of hindman-financial-metrics-sept-21

The bank had total assets of $273 million based on the latest available information. Its total assets have increased slightly over the past year, with an increase of 2.1%. In terms of the bank’s lending activities, net loans represented 34.6% of its total assets, and stood at $95 million. The bank’s loan portfolio has decreased over the past year, with a decrease of 13.5%. Within the loan portfolio, residential mortgages make up 28% of the outstanding loans of the bank, and over the past year have registered a decrease of 9.9%. In addition, the bank provides loans to commercial and industrial businesses, which represents 14.7% of its total lending and stood at $14 million based on the latest available information. The bank also provides loans for farm-related activities, which currently amounts to 0.3% of its total loan portfolio. Finally, the bank also engages in the provision of auto loans. These are loans provided to customers to help finance vehicle purchases. Auto loans represent 0.5% of the bank’s total lending.

Bank Liquidity and Funding

Liquidity and funding are two important considerations when evaluating a bank. It gives us a sense of how a bank finances its activities and can help both depositors and customers better understand a banks financial positioning. Oftentimes one of the cheapest forms of funding is customer deposits. The Bank of Hindman has total customer deposits outstanding of $232 million. The bank’s deposit base has increased over the past year, growing 4.1%. Furthermore, the bank has a loan to deposit ratio of 41% which is significantly below the national average. Banks in the United States have a loan to deposit ratio of approximately 82%. A lower ratio is better since it means that a bank’s lending activities are more comfortably covered by its deposit base. All of the bank’s deposits are sourced from domestic depositors, which is helpful from a risk assessment standpoint.

Bank Performance and Capital Metrics

bank of hindman-performance-metrics-sept-21

The above chart provides a brief summary of some of the key performance metrics for the Bank of Hindman. Next to these metrics are the equivalent for the average U.S. bank. When it comes to the bank’s return on assets, over the past year it has declined. Importantly, on this metric we can also see that the bank is below the average bank. Return on assets tells us how productive a bank is being with its asset base. Moving on to the bank’s return on equity, which tells us how much of a return the bank has generated for its owners, over the past year it has declined. In addition, we can also see that the bank is below the average bank on this metric. The bank’s total leverage ratio has been relatively stable over the past year and is currently below the national average. Last but certainly not least is the tier 1 capital ratio. This is an important measure of the financial strength of a bank and its balance sheet. the Bank of Hindman’s tier 1 capital ratio has improved over the past year, and is below the average U.S. bank.

Concluding Comments on the Bank of Hindman

Our final rating for the Bank of Hindman, after assessing the bank on several important metrics, is 2.9 out of 5.0, which is above average. Specifically, an area of strength for the bank would be its cost of funds which is above the national average. On the contrary, the bank’s net interest margin is one of the primary drawbacks on its rating as on this metric, the bank is below average. As a reminder, our rating is based on our proprietary scoring system which uses data from an in-depth nationwide bank study we performed. None of the work presented is intended to be investment advice or advice of any sort and is presented purely for informational purposes.