Bank Analysis School Case Study

12/31/20X6 Budget Assumptions

3% Asset Growth

x

10% Real Estate loan growth; 8% overall loan growth

x

6% Deposit Growth

x

x

Loan and Deposit yields are from actual GL yields. Adjustments have been made for minor increases in rates

Includes planned secondary market activity of one sale per month

x

Securities income derived from Baker Group income and cash flow projections and an assumption of $1,900,000 from reinvested cash flow

x

FHLB Advance maturing in June 20X6 will be paid off

x

x

Payroll is calculated based on current staffing levels, as well as an additional part-time employee for teller and clerical work Assume a reduced 5% profit sharing contribution and regular Christmas gift. As usual, these accruals will be adjusted based on YTD results and discussions with the Board.

x

x

Actual YEAR 6 expenses are used in the budget wherever possible. Example: Deferred Compensation Expense

Sources and Uses Assumptions

Sources of Funds

Bond Portfolio Cash Flow

3,870,000 4,035,000 7,905,000

Increase Deposits

Uses of Funds

Maturing FHLB Advance Paydown Overnight Fed Funds Increase Real Estate Loans 3,625,000 Reinvest Bonds (18 mos @ 2.55%) 1,900,000 7,905,000 1,000,000 1,380,000