BAS Case Study - March 2023

Sunny State Bank

EARNINGS - NET INTEREST MARGIN

Date Range (all ratios on page)

2014Q4 - 2018Q4

Net Interest Margin

4.24%

4.21%

4.20%

4.10%

3.97%

3.96%

4.00%

3.93%

Metrics

Bank State All Banks

3.80%

3.85%

3.71%

3.70%

3.64%

3.75%

3.73%

3.57% 3.58%

3.60%

3.57%

3.60%

2014Q4

2015Q1

2015Q2

2015Q3

2015Q4

2016Q1

2016Q2

2016Q3

2016Q4

2017Q1

2017Q2

2017Q3

2017Q4

2018Q1

2018Q2

2018Q3

2018Q4

Yield on Assets

Cost of Funds

0.40% 0.45% 0.50% 0.55% 0.60% 0.65% 0.70%

4.80%

4.73%

4.64%

4.60%

4.53%

0.55%

4.41%

0.53%

4.40%

4.38% 4.28%

4.35%

0.52%

0.53%

4.23%

0.48%

0.46%

4.20%

0.44%

4.18%

0.43%

0.43%

4.10%

0.42%

4.18%

4.16%

4.15%

0.44%

0.44%

4.05%

0.43%

0.42%

0.42%

4.00%

0.40%

3.99%

2014Q4 2018Q4 • The Net Interest Margin (NIM) is calcluated as net interest income divided by average earnings assets. Tax-equivalent adjustments are made to enable meaningful comparisons for banks that have tax-exempt income. This ratio measures the profitability of the bank’s primary activities of obtaining funds and making loans and investing (buying and selling money). • The Yield on Assets and Cost of Funds ratios are sub-components of the NIM. The Yield on Assets is calculated as Interest Income/Average Earning Assets and Cost of Funds is calculated as Interest Expenses/Average Earning Assets. Yields and costs related to specific asset and liability categories on Page 3 of the UBPR can be further analyzed to determine the root causes of NIM changes. These ratios may change for a variety of reasons. For example, management may have restructured the balance sheet, the interest rate environment may have changed, or bank loan and deposit pricing became more or less competitive. 2015Q1 2015Q2 2015Q3 2015Q4 2016Q1 2016Q2 2016Q3 2016Q4 2017Q1 2017Q2 2017Q3 2017Q4 2018Q1 2018Q2 2018Q3 2018Q4 2014Q4 2015Q1 2015Q2 2015Q3 2015Q4 2016Q1 2016Q2 2016Q3 2016Q4 2017Q1 2017Q2 2017Q3 2017Q4 2018Q1 2018Q2 2018Q3

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