Overview of Madison Valley Bank

Madison Valley Bank was first established in the year 1965. The bank’s main office is located in the state of Montana and in the city of Ennis. Madison Valley Bank has been insured by the Federal Deposit Insurance Corporation since 1966 and the independent agency has provided insurance to the bank ever since. 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 $274 million ranks it in the 50th percentile of banks in the United States. Madison Valley Bank does not currently have any offices located outside of the United States, and functionally is a domestic bank. Within the U.S., the bank currently has 5 offices. As of this writing, the bank employed a total of 48 people.

Overview of the Bank’s Assets and Liabilities

The bank currently has total assets of $274 million, total net loans to customers of $144 million and total deposits outstanding of $253 million as of this writing. Transactional deposits comprised 61% of the bank’s outstanding deposits. Meanwhile, deposits from domestic customers represented a total of 100% of the deposits outstanding and of this amount, 78% are currently insured. Looking at the asset side of the balance sheet, 53% 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 79% of the outstanding loans. Madison Valley Bank has $44 million of outstanding 1-4 family residential loans (mortgages), which in total represents 30% of its loans outstanding. Loans to individuals and loans to commercial and industrial interests represent 4% and 14% of loans outstanding, respectively. Loans to farmland and farms represents 6% of loans outstanding.

Contact Information For Madison Valley Bank

  • Main Office Address: 213 E. Main, Ennis, MT 59729
  • Website: www.madisonvalleybank.com
  • Total Number of Branches: 5
  • Total Number of International Branches: None
  • Number of Employees: 48
  • FDIC Certificate Number: 19544
  • FDIC Community Bank: Yes
  • FDIC Field Office: Billings
  • Independent or Subsidiary Bank: Independent
  • Federal Reserve ID Number: 596455
  • Bank Charter Class: NM
  • Primary Regulator: FDIC

Financial Overview

madison valley bank-financial-metrics-sept-21

Madison Valley Bank has total assets of $274 million and over the past year its asset base has increased substantially, reporting an increase of 14.4%. Moving to the other side of the balance sheet, we see net loans of $144 million which compares with $134 million in the prior year. Therefore its clear that over the past year the bank’s net loans outstanding has reported an increase of 6.9%. Within the loan portfolio, residential mortgages make up 30% of the outstanding loans of the bank, and over the past year have registered an increase of 4.3%. In addition, the bank provides loans to commercial and industrial businesses, which represents 13.5% of its total lending and stood at $20 million based on the latest available information. The bank also provides loans for farm-related activities, which currently amounts to 6.4% 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 1.8% 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. Madison Valley Bank has total customer deposits of $253 million. Looking over the past year, its deposit base has increased substantially with a growth rate of 14.8%. The average bank in the country has a loan to deposit ratio of approximately 82%. In comparison, Madison Valley Bank has a loan to deposit ratio of 57% which is significantly below the average. A lower ratio is generally better as it indicates that the lending activities of a bank are more comfortably covered by its deposit base. Deposits, as noted earlier, are usually a cost effective source of financing. The entirety of the bank’s deposit base stems from domestic depositors.

Bank Performance and Capital Metrics

madison valley bank-performance-metrics-sept-21

The above chart provides a brief summary of some of the key performance metrics for Madison Valley Bank. Next to these metrics are the equivalent for the average U.S. bank. As a starting point, looking at the bank’s 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. 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 improved. In addition, we can also see that the bank is above 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 below the average U.S. bank, and has been relatively stable over the past year. Finally, Madison Valley Bank’s Tier 1 capital ratio has improved over the past year. On this metric the bank is below the national average.

Final Thoughts: Madison Valley Bank

After factoring in all the relevant information and data, our final rating for Madison Valley Bank is 3.9 out of 5.0, which is very good. 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 tier 1 capital 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.