Bank Analysis School Case Study eBook

Sunny State Bank

EARNINGS - OVERALL PERFORMANCE RATIOS

Return on Average Assets Adj. Sub S

1.20%

(All)

1.00%

20X9Q2

0.80%

20X9Q3

0.52%

0.60%

0.47%

0.46%

20X9Q4

Metrics

0.37%

0.40%

Bank State All Banks

20X0Q1

0.15%

0.20%

20X0Q2

0.04%

0.00%

20X0Q3

(0.20%)

20X0Q4

20X1Q1

(0.32%)

(0.40%)

20X9Q4

20X0Q4

20X1Q4

20X2Q4

20X3Q4

20X4Q4

20X5Q4

20X1Q2

Return on Equity

20X1Q3

10.00%

20X1Q4

8.00%

20X2Q1

5.92%

5.75%

5.52%

20X2Q2

6.00%

4.20%

20X2Q3

4.00%

20X2Q4

1.65%

2.00%

0.50%

20X3Q1

0.00%

20X3Q2

(2.00%)

20X3Q3

(4.00%)

20X3Q4

20X9Q4

20X0Q4

20X1Q4

20X2Q4

20X3Q4

20X4Q4

20X5Q4

• 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.