Overview of Vermilion Valley Bank

The Vermilion Valley Bank is a relatively small bank whose main office is based in the state of Illinois. The bank is primarily engaged in providing farm-related loans to its customers, but also provides 1-4 family residential loans (mortgages). The bank was founded in the year 1913. Since 1934, the Federal Deposit Insurance Corporation has provided insurance to the bank. Along with the National Credit Union Administration (NCUA), the FDIC is the only other governmental agency that provides deposit insurance to American depositary institutions.  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 $164 million ranks it in the 30th percentile of banks in the United States. Vermilion Valley 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 Illinois. Finally, the bank currently has a total employee base of 19 people.

Overview of the Bank’s Assets and Liabilities

Some of the key components of the bank’s balance sheet are total assets of $164 million, total loans extended to customers of $87 million and customer deposits of $133 million. Overall, 41% 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, 79% of the domestic deposits outstanding are insured. Loans extended to customers of the bank currently comprise 54% of the bank’s total assets. Loans extended to customers for real estate purposes represented 68% of the total loans outstanding. In addition, 100% of real estate loans were domestic. Vermilion Valley Bank has $12 million of outstanding 1-4 family residential loans (mortgages), which in total represents 14% of its loans outstanding. Loans to individuals and loans to commercial and industrial interests represent 2% and 5% of loans outstanding, respectively. Loans to farmland and farms represents 77% of loans outstanding.

Contact Information For Vermilion Valley Bank

  • Main Office Address: 4 E. Peoria, Piper City, IL 60959
  • Website: www.vermilionvalleybank.com
  • Total Number of Branches: 5
  • Total Number of International Branches: None
  • Number of Employees: 19
  • FDIC Certificate Number: 11667
  • FDIC Community Bank: Yes
  • FDIC Field Office: Champaign
  • Independent or Subsidiary Bank: Independent
  • Federal Reserve ID Number: 666844
  • Bank Charter Class: NM
  • Primary Regulator: FDIC

Financial Overview

vermilion valley bank-financial-metrics-sept-21

Vermilion Valley Bank has total assets of $164 million and over the past year its asset base has increased substantially, reporting an increase of 11.3%. Moving to the other side of the balance sheet, we see net loans of $87 million which compares with $100 million in the prior year. Therefore its clear that over the past year the bank’s net loans outstanding has reported a decrease of 13.4%. Within the loan portfolio, residential mortgages make up 14% of the outstanding loans of the bank, and over the past year have registered a decrease of 9.2%. In addition, the bank provides loans to commercial and industrial businesses, which represents 5.0% of its total lending and stood at $4 million based on the latest available information. The bank also provides loans for farm-related activities, which currently amounts to 77.3% of its total loan portfolio. Credit card-related lending represents 0.2% of the banks total lending. This represents the outstanding balance of credit cards that the bank has issued to its customers. 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 1.1% 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. 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. Vermilion Valley Bank has total customer deposits of $133 million. Looking over the past year, its deposit base has increased substantially with a growth rate of 12.4%. The average bank in the country has a loan to deposit ratio of approximately 82%. In comparison, Vermilion Valley Bank has a loan to deposit ratio of 65% which is well 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

vermilion valley bank-performance-metrics-sept-21

The above chart provides a brief summary of some of the key performance metrics for Vermilion Valley Bank. Next to these metrics are the equivalent for the average U.S. bank. As a starting point, looking at the bank’s return on assets, over the past year it has been relatively stable. 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. 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 above the national average. Finally, Vermilion Valley Bank’s Tier 1 capital ratio has improved over the past year. On this metric the bank is above the national average.

Final Thoughts: Vermilion Valley Bank

After factoring in all the relevant information and data, our final rating for Vermilion Valley Bank is 4.3 out of 5.0, which is exceptional. 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, Vermilion Valley 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.