Bank Analysis School - Case Study & Resources

EARNINGS - OVERALL PERFORMANCE RATIOS

Sunny State Bank

Return on Average Assets Adj. Sub S

1.20%

1.00%

0.80%

0.52%

0.60%

0.47%

0.46%

Metrics

0.37%

0.40%

Bank

0.15%

0.20%

State

0.04%

All Banks

0.00%

(0.20%)

(0.32%)

(0.40%)

20 X9 Q4

20 X0 Q4

20 X1 Q4

20 X2 Q4

20 X3Q4

20 X4 Q4

20 X5 Q4

Return on Equity

10.00%

8.00%

5.92%

5.75%

5.52%

6.00%

4.20%

4.00%

1.65%

2.00%

0.50%

0.00%

(2.00%)

(4.00%)

20 X9 Q4 20 X5 Q4 • Return on Average Assets (ROAA) is calculated as net income divided by average assets. This ratio is a good starting point for analyzing earnings because it shows the overall return on a bank’s activities. • Return on Equity (ROE) is calculated as net income divided by equity capital. This ratio is also a measurement of overall earnings performance. It is more likely to be measured and referenced by bank management and shareholders than examiners. 20 X0 Q4 20 X1 Q4 20 X2Q4 20 X3Q4 20 X4Q4