Greater State Bank: Overview of the bank

The Greater State Bank is a relatively small bank whose main office is based in the state of Texas. The bank is primarily engaged in providing 1-4 family residential loans (mortgages) to its customers, but also provides commercial & industrial loans. The bank was founded in the year 1974. The Federal Deposit Insurance Corporation has provided insurance to the bank since 1975. The FDIC is one of two governmental agencies that provides deposit insurance to American depositary institutions – the other is the National Credit Union Administration (NCUA). The FDIC’s mandate is mainly to insure deposits, but the agency also examines and supervises financial institutions and manages receiverships. 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 $119 million ranks it in the 20th percentile of banks in the United States. Greater State Bank is primarily a domestic bank and does not at the current time have operations outside of the United States. Domestically, the bank currently has 4 offices. Finally, the bank currently has a total employee base of 36 people.

Discussion of the key components of the Bank’s Balance Sheet

The bank currently has total assets of $119 million, total net loans to customers of $80 million and total deposits outstanding of $109 million as of this writing. Domestic deposits currently represent (in terms of total size), 92% 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. Looking at the asset side of the balance sheet, 68% 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 77% of the outstanding loans. Greater State Bank has $19 million of outstanding 1-4 family residential loans (mortgages), which in total represents 23% of its loans outstanding. Loans to individuals and loans to commercial and industrial interests represent 1% and 21% of loans outstanding, respectively. Loans to farmland and farms represents 5% of loans outstanding.

Contact Information For Greater State Bank

  • Main Office Address: 3300 N. 10th St., Mcallen, TX 78501
  • Website: http://www.gstbank.com
  • Total Number of Branches: 4
  • Total Number of International Branches: None
  • Number of Employees: 36
  • FDIC Certificate Number: 31762
  • FDIC Community Bank: Yes
  • FDIC Field Office: Houston
  • Independent or Subsidiary Bank: Independent
  • Federal Reserve ID Number: 518877
  • Bank Charter Class: NM
  • Primary Regulator: FDIC

Financial Overview

greater state bank-financial-metrics-sept-21

The bank had total assets of $119 million based on the latest available information. Its total assets have increased substantially over the past year, with an increase of 14.5%. Moving to the bank’s loan portfolio, the bank has net loans outstanding of $80 million based on the latest available information. Its net loans outstanding have decreased slightly over the past year, with a decrease of 2.6%. Taking a closer look at the bank’s loan portfolio, we see that residential mortgages comprise 23% of the bank’s loan book. The bank has $19 million of residential mortgages outstanding, which compares with $15 million in the prior year. This implies an increase of 20.4% over the past year. In addition, the bank provides loans to commercial and industrial businesses, which represents 20.9% of its total lending and stood at $17 million based on the latest available information. The bank also provides loans for farm-related activities, which currently amounts to 4.9% 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 0.1% 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. Customer deposits is usually one of the cheapest ways to finance a bank. This is especially the case for accounts that don’t pay interest, such as checking accounts. Greater State Bank has total customer deposits of $109 million. Looking over the past year, its deposit base has increased substantially with a growth rate of 15.0%. In addition, the bank has a loan to deposit ratio of 73%, which is 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. Effectively all of the bank’s deposit base is funded by domestic sources.

Bank Performance and Capital Metrics

greater state bank-performance-metrics-sept-21

The above chart provides a brief summary of some of the key performance metrics for Greater State Bank. Next to these metrics are the equivalent for the average U.S. bank. Starting with its return on assets, over the past year it has improved. 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. 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 improved. 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. Finally, Greater State Bank’s Tier 1 capital ratio has been relatively stable over the past year. On this metric the bank is below the national average.

Final Thoughts: Greater State Bank

Overall, we believe Greater State Bank deserves a rating of 2.9 out of 5.0, which is a above average rating. Specifically, an area of strength for the bank would be its net interest margin which is above the national average. On the contrary, the bank’s return on assets is one of the primary drawbacks on its rating as on this metric, the bank is below average. Finally, please note that the rating information is based on our proprietary scoring system. This system was developed by us and leverages data from a nationwide bank study. Importantly, keep in mind that none of the work presented is intended to be investment advice or advice of any sort and is presented purely for informational purposes.