Bank Analysis School Case Study

Sunny State Bank

EARNINGS - OVERALL PERFORMANCE RATIOS

Return on Average Assets Adj. Sub S

1.20%

1.00%

0.80%

0.60%

0.47%

0.46%

Metrics

0.37%

0.40%

Bank State All Banks

0.15%

0.20%

0.04%

0.00%

(0.20%)

(0.32%) 20X4 Q4

(0.40%)

20X0 Q4

20X1 Q4

20X2 Q4

20X3 Q4

20X5 Q4

Return on Equity

10.00%

8.00%

5.92%

5.75%

6.00%

4.20%

4.00%

1.65%

2.00%

0.50%

0.00%

(2.00%)

(4.00%)

20X0 Q4 20X5 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. 20X1 Q4 20X2 Q4 20X3 Q4 20X4 Q4