Obannon Bank: Overview of the bank

The Obannon Bank is a relatively small bank whose main office is based in the state of Missouri. The bank is primarily engaged in providing 1-4 family residential loans (mortgages) to its customers, but also provides farm-related loans. The bank was founded in the year 1905. 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 $266 million ranks it in the 50th percentile of banks in the United States. Obannon 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 5 offices, all of which are located in the state of Missouri. As of this writing, the bank employed a total of 58 people.

Overview of the Bank’s Assets and Liabilities

Some of the key components of the bank’s balance sheet are total assets of $266 million, total loans extended to customers of $194 million and customer deposits of $239 million. In total, 90% of the bank’s total assets are made up of domestic deposits, and domestic deposits also represent 100% of the bank’s deposit base. Overall, 85% of the bank’s domestic deposits are insured. Loans extended to customers of the bank currently comprise 74% of the bank’s total assets. Loans extended to customers for real estate purposes represented 83% of the total loans outstanding. In addition, 100% of real estate loans were domestic. Obannon Bank has $57 million of outstanding 1-4 family residential loans (mortgages), which in total represents 29% of its loans outstanding. Loans to individuals and loans to commercial and industrial interests represent 2% and 10% of loans outstanding, respectively. Loans to farmland and farms represents 24% of loans outstanding.

Contact Information For Obannon Bank

  • Main Office Address: 1347 S. Ash St., Buffalo, MO 65622
  • Website: http://www.obannonbank.com
  • Total Number of Branches: 5
  • Total Number of International Branches: None
  • Number of Employees: 58
  • FDIC Certificate Number: 8295
  • FDIC Community Bank: Yes
  • FDIC Field Office: Springfield Mo
  • Independent or Subsidiary Bank: Independent
  • Federal Reserve ID Number: 955940
  • Bank Charter Class: NM
  • Primary Regulator: FDIC

Financial Overview

obannon bank-financial-metrics-sept-21

Obannon Bank has total assets of $266 million which compares with $241 million in the prior year. This implies that over the past year, the bank’s asset base has shown an increase of 10.0%. Moving to the other side of the balance sheet, we see net loans of $194 million which compares with $180 million in the prior year. Therefore its clear that over the past year the bank’s net loans outstanding has reported an increase of 7.9%. Residential mortgages comprise 29% of the outstanding loans of the bank. The outstanding balance of residential mortgages has increased slightly over the past year by 2.3%. In addition, the bank provides loans to commercial and industrial businesses, which represents 9.6% of its total lending and stood at $19 million based on the latest available information. The bank also provides loans for farm-related activities, which currently amounts to 24.2% 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 0.5% 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 Obannon Bank, they have total customer deposits of $239 million which over the past year has registered an increase of 12.4%. In addition, the bank has a loan to deposit ratio of 81%, 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

obannon bank-performance-metrics-sept-21

Above we have shown a summary of some of the performance metrics for Obannon Bank compared with 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. 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. 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. Obannon Bank’s tier 1 capital ratio has improved over the past year, and is below the average U.S. bank.

Concluding Comments on Obannon Bank

After factoring in all the relevant information and data, our final rating for Obannon Bank is 3.3 out of 5.0, which is above average. 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.