State Bank of Fairmont: Overview of the bank

State Bank of Fairmont was first established in the year 1917 and is among just a handful of banks in the United States that have been operating for more than a century. The bank’s main office is located in the state of Minnesota and in the city of Fairmont. 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. 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 $128 million ranks it in the 20th percentile of banks in the United States. State Bank of Fairmont is primarily a domestic bank and does not at the current time have operations outside of the United States. Domestically, the bank currently has 1 office. In terms of headcount, the bank currently has 17 employees.

Overview of the Bank’s Assets and Liabilities

As noted earlier, the bank has total assets of $128 million. In addition, the bank has a deposit base of $114 million and net loans outstanding of $91 million. Transactional deposits comprised 34% of the bank’s outstanding deposits. Meanwhile, deposits from domestic customers represented a total of 100% of the deposits outstanding and of this amount, 86% are currently insured. Moving on to the components of the bank’s assets we can see that loans provided to customers represent 73% of the banks total assets. Of this amount, loans related to real estate activities comprised 44% of gross loans outstanding. State Bank of Fairmont has $10 million of outstanding 1-4 family residential loans (mortgages), which in total represents 11% of its loans outstanding. Loans to individuals and loans to commercial and industrial interests represent 8% and 31% of loans outstanding, respectively. Loans to farmland and farms represents 43% of loans outstanding.

Contact Information For State Bank of Fairmont

  • Main Office Address: 918 E. Blue Earth Ave., Fairmont, MN 56031
  • Website: www.sbof.com
  • Total Number of Branches: 1
  • Total Number of International Branches: None
  • Number of Employees: 17
  • FDIC Certificate Number: 8541
  • FDIC Community Bank: Yes
  • FDIC Field Office: Mankato
  • Independent or Subsidiary Bank: Independent
  • Federal Reserve ID Number: 723158
  • Bank Charter Class: NM
  • Primary Regulator: FDIC

Financial Overview

state bank of fairmont-financial-metrics-sept-21

The bank had total assets of $128 million based on the latest available information. Its total assets have increased substantially over the past year, with an increase of 9.7%. Moving to the other side of the balance sheet, we see net loans of $91 million which compares with $89 million in the prior year. Therefore its clear that over the past year the bank’s net loans outstanding has reported an increase of 1.7%. Within the loan portfolio, residential mortgages make up 11% of the outstanding loans of the bank, and over the past year have registered a decrease of 0.1%. In addition, the bank provides loans to commercial and industrial businesses, which represents 30.6% of its total lending and stood at $28 million based on the latest available information. The bank also provides loans for farm-related activities, which currently amounts to 42.7% 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 4.2% 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. 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. State Bank of Fairmont has total customer deposits of $114 million. Looking over the past year, its deposit base has increased substantially with a growth rate of 10.7%. The average bank in the country has a loan to deposit ratio of approximately 82%. In comparison, State Bank of Fairmont has a loan to deposit ratio of 79% which is 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

state bank of fairmont-performance-metrics-sept-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 State Bank of Fairmont compared with 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. 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 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, State Bank of Fairmont’s Tier 1 capital ratio has improved over the past year. On this metric the bank is below the national average.

Concluding Comments on State Bank of Fairmont

In conclusion, when we look at all the various factors and data we give State Bank of Fairmont a 3.8 out of 5.0 rating, which we consider to be very good.  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.