Introduction to Little Horn State Bank

Established over a century ago, Little Horn State Bank is a relatively small bank that was founded in the year 1919. The bank’s main office is located in the state of Montana and this is also the only state in which the bank operates. The Federal Deposit Insurance Corporation provides insurance for the bank, in addition to providing insurance to almost 5,000 other institutions in the United States. Generally speaking, the FDIC provides insurance coverage of up to $250,000 per depositor, per insured bank and for each account ownership category. Little Horn State Bank has been insured by the FDIC since 1934 which is the year after the FDIC was created by the 1933 Banking Act. 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 $135 million ranks it in the 20th percentile of banks in the United States. Little Horn 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 2 offices. As of this writing, the bank employed a total of 27 people.

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

Some of the key components of the bank’s balance sheet are total assets of $135 million, total loans extended to customers of $106 million and customer deposits of $121 million. Overall, 65% 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, 84% of the domestic deposits outstanding are insured. As we look at the composition of the banks assets, as noted earlier the bank is primarily engaged in providing farm-related loans and commercial & industrial loans to its customers. Overall, customer loans currently make up 80% of the bank’s total assets. Little Horn State Bank has $12 million of outstanding 1-4 family residential loans (mortgages), which in total represents 11% of its loans outstanding. Loans to individuals and loans to commercial and industrial interests represent 2% and 16% of loans outstanding, respectively. Loans to farmland and farms represents 36% of loans outstanding.

Contact Information For Little Horn State Bank

  • Main Office Address: 835 N. Ctr. Ave., Hardin, MT 59034
  • Website: https://littlehornstatebank.com
  • Total Number of Branches: 2
  • Total Number of International Branches: None
  • Number of Employees: 27
  • FDIC Certificate Number: 11821
  • FDIC Community Bank: Yes
  • FDIC Field Office: Billings
  • Independent or Subsidiary Bank: Independent
  • Federal Reserve ID Number: 537551
  • Bank Charter Class: NM
  • Primary Regulator: FDIC

Financial Overview

little horn state bank-financial-metrics-sept-21

Little Horn State Bank has total assets of $135 million and over the past year its asset base has increased substantially, reporting an increase of 15.1%. Moving to the other side of the balance sheet, we see net loans of $106 million which compares with $100 million in the prior year. Therefore its clear that over the past year the bank’s net loans outstanding has reported an increase of 6.1%. Residential mortgages comprise 11% of the outstanding loans of the bank. The outstanding balance of residential mortgages has decreased over the past year by 6.6%. In addition, the bank provides loans to commercial and industrial businesses, which represents 16.3% of its total lending and stood at $18 million based on the latest available information. The bank also provides loans for farm-related activities, which currently amounts to 36.0% 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 0.9% of the bank’s total lending.

Bank Liquidity and Funding

While most banks are insured by the FDIC, the insurance coverage does not always provide full protection. Therefore, understanding a banks liquidity and funding is important to help assess the riskiness of a bank’s balance sheet. 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. Little Horn State Bank has total customer deposits of $121 million. Looking over the past year, its deposit base has increased substantially with a growth rate of 16.0%. In addition, the bank has a loan to deposit ratio of 88%, which is above 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. All of the bank’s deposits are sourced from domestic depositors, which is helpful from a risk assessment standpoint.

Bank Performance and Capital Metrics

little horn state bank-performance-metrics-sept-21

The above chart provides a brief summary of some of the key performance metrics for Little Horn 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 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 improved. In addition, we can also see that the bank is above 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. Little Horn State Bank’s tier 1 capital ratio has improved over the past year, and is below the average U.S. bank.

Concluding Comments on Little Horn State Bank

Ultimately, after considering all of the relevant factors we rate Little Horn State Bank 3.6 out of 5.0, which is very good. While for example, the bank shines when it comes to its net interest margin, which is above the national average, its tier 1 capital is a downward force on its rating. On this metric, the bank is below the national 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.