Bank Analysis School - Case Study & Resources

EARNINGS - NET INTEREST MARGIN (Quarterly)

Sunny State Bank

Dates

One Quarter Annualized Net Interest Margin

4.30%

4.24%

20 X2 Q1 - 20 X5 Q4

4.20%

4.10%

4.10%

3.97%

3.96%

4.00%

3.93%

Metrics

3.85%

3.90%

Bank

3.80%

3.70%

State

3.71%

3.75%

3.70%

3.64%

3.73%

All Banks

3.57%

3.57% 3.58%

3.60%

3.60%

20 X2 Q1

20 X2 Q2

20 X2 Q3

20 X2 Q4

20 X3 Q1

20 X3 Q2

20 X3 Q3

20 X3 Q4

20 X4 Q1

20 X4 Q2

20 X4 Q3

20 X4 Q4

20 X5 Q1

20 X5 Q2

20 X5 Q3

20 X5 Q4

One Quarter Annualized Yield on Assets

One Quarter Annualized Cost of Funds

4.70%

0.70%

4.64%

4.60%

0.65%

4.53%

4.50%

0.60%

4.41%

0.55%

4.40%

4.35%

4.38%

0.55%

4.28%

4.30%

0.52%

4.23%

0.53%

0.50%

4.20%

0.48%

4.15%

0.46%

4.18%

0.44%

4.10%

4.18%

0.45%

4.17%

0.43%

0.43%

4.16%

0.42%

4.10%

0.44%

0.44%

0.43%

0.42%

0.42%

0.40%

4.00%

0.40%

3.95%

3.99%

20 X2 Q1 20 X5 Q4 • 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. 20 X2 Q2 20 X2 Q3 20 X2 Q4 20 X3 Q1 20 X3 Q2 20 X3 Q3 20 X3 Q4 20 X4 Q1 20 X4 Q2 20 X4 Q3 20 X4 Q4 20 X5 Q1 20 X5 Q2 20 X5 Q3 20 X5 Q4 20 X2 Q1 20 X2 Q2 20 X2 Q3 20 X2 Q4 20 X3 Q1 20 X3 Q2 20 X3 Q3 20 X3 Q4 20 X4 Q1 20 X4 Q2 20 X4 Q3 20 X4 Q4 20 X5 Q1 20 X5 Q2 20 X5 Q3