Bank Analysis School Case Study eBook

Sunny State Bank

LOAN LOSS HISTORY

Net Loan Losses/Average Loans

0.50%

(All)

20X9Q2

0.40%

20X9Q3

0.32%

0.30%

Metrics

20X9Q4

0.30%

Bank State All Banks

20X0Q1

0.18%

0.20%

20X0Q2

0.19%

0.10%

20X0Q3

0.10%

20X0Q4

0.02%

20X1Q1

20X9Q4

20X0Q4

20X1Q4

20X2Q4

20X3Q4

20X4Q4

20X5Q4

20X1Q2

Recoveries to Prior Credit Losses

20X1Q3

450.0%

445.5%

20X1Q4

400.0%

20X2Q1

350.0%

20X2Q2

300.0%

20X2Q3

250.0%

20X2Q4

200.0%

20X3Q1

150.0%

20X3Q2

100.0%

41.6%

20X3Q3

50.0%

5.1%

6.6%

6.7%

4.1%

20X3Q4

20X9Q4

20X0Q4

20X1Q4

20X2Q4

20X3Q4

20X4Q4

20X5Q4

• Net loan losses = gross loan losses - recoveries. Past loan losses are often a sign of poor underwriting and/or credit administration. The next page shows net loan losses for particular loan types. • Recoveries to Prior Credit Losses = loan recoveries in the current year / gross loan losses in the preceding year. A low amount of recoveries could indicate management is slow to recognize loan losses (waiting until there is very little chance of recovery before charging loans off the books).

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