Newport Federal Bank: Overview of the bank

Newport Federal Bank was established in 1934. Its main office is located in the state of Tennessee in the city of Newport. Tennessee is home to 128 banks that collectively have $214,955 million of assets outstanding. 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.  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 $258 million ranks it in the 40th percentile of banks in the United States. Newport Federal Bank 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 3 offices, all of which are located in the state of Tennessee. Finally, the bank currently has a total employee base of 36 people.

Overview of the Bank’s Assets and Liabilities

The bank currently has total assets of $258 million, total net loans to customers of $103 million and total deposits outstanding of $233 million as of this writing. Approximately 35% of the bank’s deposits outstanding were transactional deposits, while domestic depositors made up 100% of the bank’s total deposit base. 75% of the domestic deposits outstanding are insured. Loans extended to customers of the bank currently comprise 41% of the bank’s total assets. Loans extended to customers for real estate purposes represented 96% of the total loans outstanding. In addition, 100% of real estate loans were domestic. Newport Federal Bank has $75 million of outstanding 1-4 family residential loans (mortgages), which in total represents 72% of its loans outstanding. Loans to individuals and loans to commercial and industrial interests represent 2% and 1% of loans outstanding, respectively. Loans to farmland and farms represents 1% of loans outstanding.

Contact Information For Newport Federal Bank

  • Main Office Address: 170 W. Broadway, Newport, TN 37821
  • Website: www.newportfederalbank.com
  • Total Number of Branches: 3
  • Total Number of International Branches: None
  • Number of Employees: 36
  • FDIC Certificate Number: 29089
  • FDIC Community Bank: Yes
  • FDIC Field Office: Knoxville
  • Independent or Subsidiary Bank: Independent
  • Federal Reserve ID Number: 894272
  • Bank Charter Class: SA
  • Primary Regulator: OCC

Financial Overview

newport federal bank-financial-metrics-sept-21

Newport Federal Bank has total assets of $258 million which compares with $240 million in the prior year. This implies that over the past year, the bank’s asset base has shown an increase of 7.5%. Moving to the other side of the balance sheet, we see net loans of $103 million which compares with $106 million in the prior year. Therefore its clear that over the past year the bank’s net loans outstanding has reported a decrease of 2.6%. Taking a closer look at the bank’s loan portfolio, we see that residential mortgages, which make up the majority of the bank’s lending activities comprise 72% of the bank’s loan book. The bank has $75 million of residential mortgages outstanding, which compares with $81 million in the prior year. This implies a decrease of 7.3% over the past year. In addition, the bank provides loans to commercial and industrial businesses, which represents 1.3% of its total lending and stood at $1 million based on the latest available information. The bank also provides loans for farm-related activities, which currently amounts to 1.2% 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 0.8% of the bank’s total lending.

Bank Liquidity and Funding

How a bank funds its activities is an important area to assess and monitor. As a depositor you want to make sure the bank is conservatively funded, and the same goes for customers. Oftentimes one of the cheapest forms of funding is customer deposits. Newport Federal Bank has total customer deposits outstanding of $233 million. The bank’s deposit base has increased substantially over the past year, growing 9.5%. The average bank in the country has a loan to deposit ratio of approximately 82%. In comparison, Newport Federal Bank has a loan to deposit ratio of 44% 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

newport federal bank-performance-metrics-dec-21

The above chart provides a brief summary of some of the key performance metrics for Newport Federal Bank. 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 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. 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 declined over the past year. Finally, we could not find Newport Federal Bank’s risk-weighted asset information for this period and therefore had to make some assumptions and estimates. We estimate that the bank had a tier 1 capital ratio of 14.5% which is below the average U.S. bank.

Conclusion: Newport Federal Bank

In conclusion, when we look at all the various factors and data we give Newport Federal Bank a 2.6 out of 5.0 rating, which we consider to be average. There are many factors that go into the calculation of our rating and almost all banks will have both positive and negative contributors. As an example, Newport Federal Bank scores well on its cost of funds, which is above the national average. However when we consider the bank’s net interest margin, the bank does not have a good score mainly because it is below the national average which impacts its rating. Importantly, please be aware that none of the information presented is meant to be investment advice or advice of any form. All of the information and views expressed in this note and on this site are purely for informational purposes.