Bank Management 465/865
Homework #1- Analysis of Financial Performance
1. First you will need to download the Asset and Liability reports and the Income and Expense reports for Nebraska Bank of Commerce (NBC) from the FDIC web page.
a. Go to the FDIC website, go to Industry Analysis, Bank data and statistics, then use the Institutional directory and find banks.
b. Once you find NBC, notice the ID report selection box on the web page. Use this drop down menu to generate Asset & Liability reports for 12/31/10, 12/31/11, 12/31/12 & 12/31/13 and the Income and Expense report for years 2010, 2011, 2012 and 2013
2. Use financial ratio analysis to ...view middle of the document...
Lending also remains weak in both year as Total loans and leases fell slightly again. The Nonperforming Loan to Total Loan ratio also indicate that the bank is under more stress caused by loans that are not paying as scheduled in 2010. The Net Interest Margin is a good measure of how well a bank gathers deposits and non-deposit funds and transforms them into loans and securities. Thus, 2010 NIM indicate an inefficiency in managing their asset.
Return on assets (ROA) -1.39% -4.62%
Return on equity (ROE) -13.38% -46.63%
Burden Ratio 3.66% 4.02%
Net interest margin 2.91% 2.41%
Non-Performing Loans/ Total Loans 1.36% 4.69%
Rates Paid on Funds (RPF) 1.36% 1.98%
Capital Adequacy Ratio (CRAR) 13.41% 19.20%
In NBC’s 2011 financial statement, we can see an increase in the ROA, ROE, and Net interest margin. This indicate that NBC had increase their profitability from 2010 even though the ROA and ROE were still a negative number. The main reason for this improvement is from the increase of over $10 million in total asset especially in net loan and leases. There was also a drastic decrease in non-performing loans for over 3% from 2010 which lead to an increase in earning assets and net income. The Net Interest Margin also show that NBC was able to use their deposits more efficiently to create more loans
Return on assets (ROA) 0.26% -1.39%
Return on equity (ROE) 2.95% -13.38%
Burden Ratio 0.61% 3.66%
Net interest margin 3.49% 2.91%
Non-Performing Loans/ Total Loans 0.067% 1.36%
Rates Paid on Funds (RPF) 1.07% 1.36%
CRAR 11.95% 13.41%
In 2012, NBC had continuing to increase their total loan and leases and total assets. There was also an increase of over $800,000 interest income in 2012 resulting from the increasing in loans & leases of the previous year. The non-performing loan also decrease from about $712,000 in 2011 to $52,000 in 2012. The increase in Net Interest Margin was another indicator that NBC was able to use their asset better during 2012. They were able to increase total deposits from $54 million in 2011 to over $64 million in 2012 and use it to increase almost...