Introduction to First Bank of Boaz

Established in the year 1906 and with its main office located in the city of Boaz which is located in the state of Alabama, First Bank of Boaz is a relatively small bank that has been operating for 116 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. In addition, the FDIC is the primary federal regulator for the bank and is focused on supervising and examining the bank for operational safety and soundness. 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 $284 million ranks it in the 50th percentile of banks in the United States. First Bank of Boaz is essentially a purely domestic bank from an operational standpoint. This is because the bank does not have offices outside of the United States. Within the U.S. the bank currently has 1 office which is located in the state of Alabama. In terms of headcount, the bank currently has 24 employees.

Overview of the Bank’s Assets and Liabilities

As previously indicated, the bank currently has total assets of $284 million, which makes it a relatively small bank in the United States. The bank also has net loans outstanding to customers of $50 million and a deposit base of $210 million. Overall, 42% of the bank’s deposits outstanding were transactional deposits. Transactional accounts are accounts like checking accounts which will tend to have more volatile balances. From an operational standpoint non-transactional accounts are more stable and attractive. In terms of the location of depositors, domestic depositors made up 100% of the bank’s total deposit base. Within this, 67% of the domestic deposits outstanding are insured. Looking at the asset side of the balance sheet, 18% of the bank’s total asset base consisted of loans to customers (keep in mind that this is on a gross basis). Loans for real estate purposes alone comprised 62% of the outstanding loans. First Bank of Boaz has $14 million of outstanding 1-4 family residential loans (mortgages), which in total represents 27% of its loans outstanding. Loans to individuals and loans to commercial and industrial interests represent 9% and 24% of loans outstanding, respectively. Loans to farmland and farms represents 2% of loans outstanding.

Contact and Other Information For First Bank of Boaz

  • Main Office Address: 124 S. Main St., Boaz, AL 35957
  • Website: http://firstbankofboaz.com
  • Total Number of Branches: 1
  • Total Number of International Branches: None
  • Number of Employees: 24
  • FDIC Certificate Number: 2784
  • FDIC Community Bank: Yes
  • FDIC Field Office: Shelby
  • Independent or Subsidiary Bank: Independent
  • Federal Reserve ID Number: 533535
  • Bank Charter Class: NM
  • Primary Regulator: FDIC

Financial Overview

first bank of boaz-financial-metrics-sept-21

First Bank of Boaz has total assets of $284 million and over the past year its asset base has increased slightly, reporting an increase of 1.4%. Moving to the other side of the balance sheet, we see net loans of $50 million which compares with $75 million in the prior year. Therefore its clear that over the past year the bank’s net loans outstanding has reported a decrease of 32.7%. Within the loan portfolio, residential mortgages make up 27% of the outstanding loans of the bank, and over the past year have registered a decrease of 10.2%. In addition, the bank provides loans to commercial and industrial businesses, which represents 23.9% of its total lending and stood at $12 million based on the latest available information. The bank also provides loans for farm-related activities, which currently amounts to 1.7% 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 5.8% 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. A large and growing deposit base is usually a good sign for a bank’s liquidity and funding. This is because customer deposits are often a cheap source of financing as many of those accounts do not pay interest or much interest. Looking at First Bank of Boaz, they have total customer deposits of $210 million which over the past year has registered an increase of 10.9%. In addition, the bank has a loan to deposit ratio of 24%, which is significantly below the average of banks in the United States. The average in the United States is approximately 82% and as a reminder, a lower ratio indicates greater liquidity. The entirety of the bank’s deposit base stems from domestic depositors.

Bank Performance and Capital Metrics

first bank of boaz-performance-metrics-sept-21

Moving on to the performance and capital metrics for the bank, in the above we have a chart that shows key performance metrics for First Bank of Boaz compared with the average U.S. bank. When it comes to the bank’s return on assets, over the past year it has been relatively stable. Importantly, on this metric we can also see that the bank is above the average bank. Return on assets tells us how productive a bank is being with its asset base. Next, looking at 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 been relatively stable. In addition, we can also see that the bank is below the average bank on this metric. Another metric that is helpful in contextualizing a bank’s return on equity is its leverage ratio. A lower ratio means that the bank has a higher reliance on borrowing to deliver its return on equity. In this case, the total leverage ratio is currently above the average U.S. bank, and has been relatively stable over the past year. 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. First Bank of Boaz’s tier 1 capital ratio has improved over the past year, and is above the average U.S. bank.

Final Thoughts: First Bank of Boaz

In conclusion, when we look at all the various factors and data we give First Bank of Boaz a 4.0 out of 5.0 rating, which we consider to be exceptional. 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.