Raritan State Bank: Overview of the bank

Established in the year 1920 and with its main office located in the city of Raritan which is located in the state of Illinois, Raritan State Bank is a relatively small bank that has been operating for 102 years. Raritan State Bank has been insured by the Federal Deposit Insurance Corporation since 1934 which is actually the first full year the FDIC existed. The agency was created in 1933 by the passing of 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 $225 million ranks it in the 40th percentile of banks in the United States. Raritan State 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 Illinois. As of this writing, the bank employed a total of 33 people.

Overview of the Bank’s Assets and Liabilities

As noted earlier, the bank has total assets of $225 million. In addition, the bank has a deposit base of $201 million and net loans outstanding of $138 million. Overall, 20% 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, 94% 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 1-4 family residential loans (mortgages) to its customers. Overall, customer loans currently make up 62% of the bank’s total assets. Raritan State Bank has $52 million of outstanding 1-4 family residential loans (mortgages), which in total represents 37% of its loans outstanding. Loans to individuals and loans to commercial and industrial interests represent 8% and 13% of loans outstanding, respectively. Loans to farmland and farms represents 42% of loans outstanding.

Contact Information For Raritan State Bank

  • Main Office Address: 106 E. Main St., Raritan, IL 61471
  • Website: http://www.raritanstatebank.com
  • Total Number of Branches: 3
  • Total Number of International Branches: None
  • Number of Employees: 33
  • FDIC Certificate Number: 10438
  • FDIC Community Bank: Yes
  • FDIC Field Office: Princeton
  • Independent or Subsidiary Bank: Independent
  • Federal Reserve ID Number: 749943
  • Bank Charter Class: NM
  • Primary Regulator: FDIC

Financial Overview

raritan state bank-financial-metrics-sept-21

Raritan State Bank has total assets of $225 million which compares with $199 million in the prior year. This implies that over the past year, the bank’s asset base has shown an increase of 12.9%. Moving to the bank’s loan portfolio, the bank has net loans outstanding of $138 million based on the latest available information. Its net loans outstanding have decreased slightly over the past year, with a decrease of 1.7%. Taking a closer look at the bank’s loan portfolio, we see that residential mortgages comprise 37% of the bank’s loan book. The bank has $52 million of residential mortgages outstanding, which compares with $49 million in the prior year. This implies an increase of 4.9% over the past year. In addition, the bank provides loans to commercial and industrial businesses, which represents 13.0% 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 41.9% 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 3.7% 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. 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 Raritan State Bank, they have total customer deposits of $201 million which over the past year has registered an increase of 14.3%. Furthermore, the bank has a loan to deposit ratio of 69% which is well below the national average. Banks in the United States have a loan to deposit ratio of approximately 82%. A lower ratio is better since it means that a bank’s lending activities are more comfortably covered by its deposit base. All of the bank’s deposits are sourced from domestic depositors, which is helpful from a risk assessment standpoint.

Bank Performance and Capital Metrics

raritan state bank-performance-metrics-sept-21

The above chart provides a brief summary of some of the key performance metrics for Raritan State 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. 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 below the average bank on this metric. The bank’s total leverage ratio has declined over the past year and is currently below the national average. Finally, we could not find Raritan State 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 16.7% which is approximately inline the average U.S. bank.

Concluding Comments on Raritan State Bank

In conclusion, when we look at all the various factors and data we give Raritan State Bank a 3.1 out of 5.0 rating, which we consider to be above 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, Raritan State 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. As a reminder, our rating is based on our proprietary scoring system which uses data from an in-depth nationwide bank study we performed. None of the work presented is intended to be investment advice or advice of any sort and is presented purely for informational purposes