2019 Journal of Community Bank Case Studies

2019 COMMUNITY BANK CASE STUDY COMPETITION

ROE Peer Comparison

decline of 14% on all corporate profits was drastically beneficial to all C-Corporations (After Tax). In the earnings call, as well as an interview, the CEO of People’s Intermountain Bank, Len Williams, emphasized the impact of this reform. In 2018, People’s Intermountain Bank incurred tax expense of $12.1 million compared to $16.5 million in 2017 (Williams). When seen through the lens that net income doubled between these years, the tax reform is significant. People’s Intermountain Bank incurred expenses in 2017 that took its earnings performance lower than past years. The bank incurred a one- time deferred income tax expense of $4.7 million as well as expenses for its merger and acquisition totaling $4.8 million (2017 Annual Report). People’s Intermountain Bank has $2.2 billion dollars in assets and therefore falls in peer group four ($1-$3 billion in assets). When compared with its

ROE Peer Group

20.00%

14.85%

15.00%

10.68%

10.68%

10.49%

9.76% 8.60%

8.46% 8.18% 7.92%

10.00%

8.42%

Percentage 5.00%

0.00%

2014

2015

2016

2017

2018

Year

ROA Peer Comparison

ROA Peer Group

1.90%

2.00%

1.54%

1.50%

1.34%

1.24%

1.28%

1.00% 1.18%

1.00%

0.99%

0.97%

1.00%

Percentage 0.50%

0.00%

2014

2015

2016

2017

2018

Year

added both profitable assets to the bank’s portfolio and key locations along the highly trafficked interstate, I-15 (Deseret News). Though often overlooked, as it relates to financial statements of the fiscal year 2018, the tax reform was a huge financial advantage and relief for all C-Corporations. The “Tax Cuts and Jobs Act” was signed by President Trump in December of 2017. This act changed the corporate tax rate from 35% to 21% on all corporate profits (Pomerleau). The tax rate

peer group, People’s Intermountain Bank is ranked in the 91st percentile with ROA at 1.9% versus the peer group average at 1.24%. In the last five years People’s Intermountain Bank has increased its ROA by 52% with nearly constant increases year-over-year (FFIEC). ROE has improved 81.7% to 14.9% for the year ending 2018. People’s Intermountain Bank has been well above its peer group in ROE for the last five years (FFIEC). The increase from 2017

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