BAS Case Study - March 2023

Sunny State Bank

LOAN LOSS HISTORY

Net Loan Losses/Average Loans

0.50%

(All)

2013Q4

0.40%

0.32%

2014Q1

0.30%

Metrics

2014Q2

0.30%

Bank State All Banks

2014Q3

0.20%

2014Q4

0.19%

0.18%

0.10%

2015Q1

0.10%

2015Q2

2015Q3

2013Q4

2014Q4

2015Q4

2016Q4

2017Q4

2018Q4

2015Q4

Recoveries to Prior Credit Losses

2016Q1

450.0%

445.5%

2016Q2

400.0%

2016Q3

300.0% 350.0%

2016Q4

2017Q1

250.0%

2017Q2

200.0%

2017Q3

100.0% 150.0%

2017Q4

41.6%

2018Q1

50.0%

6.6%

6.7%

4.1%

0.0%

2018Q2

2013Q4

2014Q4

2015Q4

2016Q4

2017Q4

2018Q4

• Net loan losses = gross loan losses - recoveries. Past loan losses are often a sign of poor underwriting and/or credit administration. The next page shows net loan losses for particular loan types. • Recoveries to Prior Credit Losses = loan recoveries in the current year / gross loan losses in the preceding year. A low amount of recoveries could indicate management is slow to recognize loan losses (waiting until there is very little chance of recovery before charging loans off the books).