2019 Journal of Community Bank Case Studies

2019 COMMUNITY BANK CASE STUDY COMPETITION

from 9.5% in 2014 to 10.7% in 2018. Nonetheless, the intervening years saw a decrease in ROE as compared to the 2014 figure. Though comparative ROE data was not available for PG5 at the unconsolidated bank level, Hassan and Hippler suggest that while the average community bank ROE was previously 12.1% (versus 14.7% percent for non-community banks) this had declined in the years after the Great Recession due to additional regulatory burdens and a more constrained economic environment.. Their analysis would seem to hold true for Kish, although Kish has historically been ranked in

the Top 200 most profitable community banks (based on a three-year average of ROE) by American Banker Magazine. Loan Portfolio Composition The vast majority of Kish’s 2018 loan portfolio is comprised of real estate loans, which accounts for 76.39% of its portfolio. More specifically, residential real estate loans equates to 42.28% of the portfolio while the balance of 34.11% is commercial real estate loans. In terms of size, these are followed by commercial and industrial loans at 16.00%, other loans and leases at 6.53%, individual loans at 1.31%,

and agricultural loans at 0.82%. As indicated above, Kish has maintained a relatively consistent composition in its portfolio, in percentage terms, over time. However, what the above chart fails to show is the significant growth in Kish’s loan book in that timeframe. To highlight and present a comprehensive analysis of this growth, the table below breaks down

Loan portfolio percentages

Real Estate Commercial

Other & Leases

Individual

Agricultural

100%

80%

60%

40%

Percentage 20%

$0

2014

2015

2016

2017

2018

Year

Kish’s loan composition (in $ millions) from 2014 to 2018 and YOY % growth

2014

2015

2016

2017

2018

Overall % increase

$m % $m % $m % $m % $m

Real Estate

314.0 2.9% 323.1 10.5% 357.1 19.0% 425.1 13.3% 481.7

53.4%

Commercial

57.0 20.9% 68.9 15.4% 79.5 20.7% 95.9 5.2% 100.9

77.1%

Other & Leases

36.7 25.0% 45.9 -7.4% 42.5 -6.3% 39.8 3.3% 41.2

12.1%

Individual

8.1 16.4% 9.4 24.3% 11.7 -17.7% 9.6 -14.3% 8.3

2.1%

Agricultural

4.3 17.4% 5.1 -5.8% 4.8 14.5% 6.0 -6.3% 5.2

18.6%

Total

420.2 7.7% 452.5 9.5% 495.6 16.2% 576.0 11% 637.3

51.7%

10