Bank Analysis School Case Study eBook

Sunny State Bank

EARNINGS - OVERHEAD COSTS (cont.)

Personnel Expenses/Average Assets

1.85% 1.85%

(All)

1.73%

1.75%

1.68%

20X9Q2

Metrics

1.63%

1.62%

1.65%

20X9Q3

Bank State All Banks

1.55%

20X9Q4

1.52%

1.45%

20X0Q1

20X9Q4

20X0Q4

20X1Q4

20X2Q4

20X3Q4

20X4Q4

20X5Q4

20X0Q2

Occupancy Expenses/Average Assets

20X0Q3

0.52%

0.50%

20X0Q4

0.52%

0.52%

0.47%

0.48%

20X1Q1

0.44%

0.44%

0.41%

20X1Q2

0.39%

0.40%

20X1Q3

0.36%

20X1Q4

0.32%

20X2Q1

20X9Q4

20X0Q4

20X1Q4

20X2Q4

20X3Q4

20X4Q4

20X5Q4

20X2Q2

Other Operating Expenses/Average Assets

20X2Q3

2.00%

1.84%

20X2Q4

1.80%

20X3Q1

1.59%

1.57%

1.52%

1.52%

1.60%

1.47%

1.45%

20X3Q2

1.40%

20X3Q3

1.20%

20X3Q4

1.00%

20X4Q1

20X9Q4

20X0Q4

20X1Q4

20X2Q4

20X3Q4

20X4Q4

20X5Q4

The UBPR breaks noninterest expenses into three categories: personnel, occupancy, and other. While lower overhead costs beneft earnings performance, keep in mind that if management tries to keep overhead costs extremely low, there may not be enough staff or resources to have good compliance and risk management practices. Average Personnel Expenses Per Employee & Asset Per Employee are additional ratios which can be found on page 3 of the UBPR.