Introduction to Rio Bank

Rio Bank was first established in the year 1985. The bank’s main office is located in the state of Texas and in the city of Mcallen. Rio Bank has been insured by the Federal Deposit Insurance Corporation since 1985 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 $745 million ranks it in the 70th percentile of banks in the United States. Rio 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 15 offices. Finally, the bank currently has a total employee base of 184 people.

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

As previously indicated, the bank currently has total assets of $745 million, which makes it a mid-sized bank in the United States. The bank also has net loans outstanding to customers of $366 million and a deposit base of $657 million. Overall, 50% 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, 70% of the domestic deposits outstanding are insured. Outstanding loans to the bank’s customers makes up 50% of the bank’s assets. Within this, real estate loans represented 76% of the total and 100% of real estate loans were domestic. Rio Bank has $47 million of outstanding 1-4 family residential loans (mortgages), which in total represents 13% of its loans outstanding. Loans to individuals and loans to commercial and industrial interests represent 1% and 21% of loans outstanding, respectively. Loans to farmland and farms represents 9% of loans outstanding.

Contact Information For Rio Bank

  • Main Office Address: 701 E Expwy. 83, Mcallen, TX 78501
  • Website: https://riobk.com
  • Total Number of Branches: 15
  • Total Number of International Branches: None
  • Number of Employees: 184
  • FDIC Certificate Number: 25886
  • FDIC Community Bank: Yes
  • FDIC Field Office: Houston
  • Independent or Subsidiary Bank: Independent
  • Federal Reserve ID Number: 956750
  • Bank Charter Class: NM
  • Primary Regulator: FDIC

Financial Overview

rio bank-financial-metrics-dec-21

The bank had total assets of $745 million based on the latest available information. Its total assets have increased substantially over the past year, with an increase of 11.6%. Moving to the bank’s loan portfolio, the bank has net loans outstanding of $366 million based on the latest available information. Its net loans outstanding have decreased over the past year, with a decrease of 4.0%. Taking a closer look at the bank’s loan portfolio, we see that residential mortgages comprise 13% of the bank’s loan book. The bank has $47 million of residential mortgages outstanding, which compares with $45 million in the prior year. This implies an increase of 3.7% over the past year. In addition, the bank provides loans to commercial and industrial businesses, which represents 21.4% of its total lending and stood at $79 million based on the latest available information. The bank also provides loans for farm-related activities, which currently amounts to 8.5% 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 0.2% 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. Rio Bank has total customer deposits of $657 million. Looking over the past year, its deposit base has increased substantially with a growth rate of 12.3%. The average bank in the country has a loan to deposit ratio of approximately 82%. In comparison, Rio Bank has a loan to deposit ratio of 56% 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. Effectively all of the bank’s deposit base is funded by domestic sources.

Bank Performance and Capital Metrics

rio bank-performance-metrics-dec-21

Moving on to the performance and capital metrics for the bank, in the above we have a chart that shows key performance metrics for Rio 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 below 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. Finally, Rio Bank’s Tier 1 capital ratio has improved over the past year. On this metric the bank is below the national average.

Concluding Comments on Rio Bank

Our final rating for Rio Bank, after assessing the bank on several important metrics, is 3.5 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 return on assets 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.