Bank Analysis School Case Study

Sunny State Bank

EARNINGS - OVERHEAD COSTS (cont.)

Personnel Expenses/Average Assets

1.73%

1.72%

(All)

1.68%

1.63%

20X0 Q4 20X1 Q1 20X1 Q2 20X1 Q3 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

Metrics

1.62%

1.64%

Bank State All Banks

1.56%

1.52%

1.48%

20X0 Q4

20X1 Q4

20X2 Q4

20X3 Q4

20X4 Q4

20X5 Q4

Occupancy Expenses/Average Assets

0.32% 0.36% 0.40% 0.44% 0.48% 0.52%

0.50%

0.52%

0.52%

0.47%

0.44%

0.41%

20X0 Q4

20X2 Q4

20X1 Q4

20X3 Q4

20X4 Q4

20X5 Q4

Other Operating Expenses/Average Assets

1.52%

1.52%

1.59%

1.47%

1.57%

1.45%

1.50%

1.30%

1.10%

0.90%

20X0 Q4 20X5 Q4 The UBPR breaks noninterest expenses into three categories: personnel, occupancy, and other. While lower overhead costs benefit 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. 20X1 Q4 20X2 Q4 20X3 Q4 20X4 Q4