Bank Analysis School eBook

Internal Use Only

How would you rate Earnings? Bank A

• Total assets $500 million and ROAA of 1.00% Bank B • Consistently profitable with no changes to product lines for many years. • Modest growth rate. • Capital ratios have been steadily increasing.

• Total assets $500 million and ROAA of 1.00% • Recently launched new high yielding but high-risk lending program which is rapidly growing. • Capital ratios have been falling due to the rapid growth. • Allowance has been dwindling due to loan losses.

Internal Use Only

Write down your most important take-away from this session.