Bank Analysis School Case Study

Sunny State Bank

IRR - ASSET MATURITY INFO

Assets > 5 Years / Total Assets

Assets > 15 Years / Total Assets

80%

10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 40.0% 45.0%

41.6% 41.2%

39.4%

39.5%

71%

71%

70% 70%

69%

38.0%

69%

37.5%

40.8%

67%

70%

66%

66%

35.4%

39.7%

39.7%

65%

64%

34.6%

70%

38.2%

69%

68%

36.5%

31.6% 31.9%

66%

66%

66%

35.2%

64%

64%

60%

60%

32.8%

32.8%

30.5%

Metrics

24.9%

50%

Bank State All Banks

40%

30%

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

20X5 Q4

20X0 Q4

20X1 Q1

20X1 Q2

20X1 Q3

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

20X1 Q4

Assets > 5 Years / Total Assets (By Category)

Assets > 15 Years / Total Assets (By Category)

80%

5% 10% 15% 20% 25% 30% 35% 40% 45%

70%

60%

50%

Metrics

40%

MBS Loans Bonds

30%

20%

10%

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

20X5 Q4

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

20X5 Q4

• Holding a large amount of long-term assets often corresponds with risk to rising interest rates, because the yield on long-term assets could be stagnant for a long period while rising interest rates cause funding costs to increase. • Keep in mind that debt securities are typically non-amortizing and tend to have longer durations than amortizing loans and MBS; the implication being that a high amount of long term debt securities is more concerning than a high amount of long-term loans and mortgage-backed securities (MBS).