BAS Case Study - March 2023

Sunny State Bank

EARNINGS - OVERHEAD COSTS (cont.)

Personnel Expenses/Average Assets

1.73%

1.72%

(All)

1.68%

1.63%

2013Q4

Metrics

1.62%

1.64%

Bank State All Banks

2014Q1

1.56%

2014Q2

1.52%

1.48%

2014Q3

2013Q4

2014Q4

2015Q4

2016Q4

2017Q4

2018Q4

2014Q4

Occupancy Expenses/Average Assets

2015Q1

0.32% 0.36% 0.40% 0.44% 0.48% 0.52%

0.50%

2015Q2

0.52%

0.52%

0.47%

2015Q3

0.44%

0.41%

2015Q4

2016Q1

2016Q2

2016Q3

2013Q4

2014Q4

2015Q4

2016Q4

2017Q4

2018Q4

2016Q4

Other Operating Expenses/Average Assets

2017Q1

1.52%

1.52%

1.59%

1.47%

2017Q2

1.57%

1.45%

1.50%

2017Q3

1.30%

2017Q4

1.10%

2018Q1

2018Q2

0.90%

2018Q3

2013Q4

2014Q4

2015Q4

2016Q4

2017Q4

2018Q4

The UBPR breaks noninterest expenses into three categories: personnel, occupancy, and other. While lower overhead costs benefit earnings performance, keep in mind that if management tries to keep overhead costs extremely low, there may not be enough staff or resources to have good compliance and risk management practices. Average Personnel Expenses Per Employee & Asset Per Employee are additional ratios which can be found on page 3 of the UBPR.