Bank Analysis School Case Study

Sunny State Bank

EARNINGS - ASSET YIELDS

Date Range (all ratios on page)

20X1 Q4 - 20X5 Q4

Yield on Loans

5.56%

5.10% 5.20% 5.30% 5.40% 5.50% 5.60%

5.54%

5.49%

5.49%

5.44%

5.35%

5.41%

5.31%

5.29%

5.35%

5.30%

5.24%

Metrics

5.29%

5.25%

5.25%

Bank State All Banks

5.18%

5.11%

5.00%

20X1 Q4

20X2 Q1

20X2 Q2

20X2 Q3

20X2 Q4

20X3 Q1

20X3 Q2

20X3 Q3

20X3 Q4

20X4 Q1

20X4 Q2

20X4 Q3

20X4 Q4

20X5 Q1

20X5 Q2

20X5 Q3

20X5 Q4

Yield on Securities

4.00%

3.66%

3.60%

3.39%

3.20%

2.93%

2.80%

2.63%

2.58%

2.52%

2.67%

2.41%

2.40%

2.35% 2.33% 2.32%

2.40%

2.42%

2.26%

2.22%

2.00%

2.03%

1.79%

20X1 Q4

20X2 Q1

20X2 Q2

20X2 Q3

20X2 Q4

20X3 Q1

20X3 Q2

20X3 Q3

20X3 Q4

20X4 Q1

20X4 Q2

20X4 Q3

20X4 Q4

20X5 Q1

20X5 Q2

20X5 Q3

20X5 Q4

Higher yielding loan and securities portfolios benefit the NIM but could be indicative of higher-risk (high risk = high expected return). Strong loan volume typically has a positive impact on the NIM, and vice versa, because loans are typically the highest-yielding asset category. A chart showing the Net Loans to Assets Ratio can be found in the Liquidity section of this report.