Bank Financial Statements

Gup and Kolari: Chp. 3 Statements End Yr. 1 Qtr. 4

Balance Sheet Production/Financial Service FirmServices ASSETS Cash Small Cash Small Accts. Rec. Medium Investments Medium Inventory Medium Loans LARGE Fixed Assets Large Premises Small Liabs/OE Accts. Pay. Medium Deposits Large L/T Debt Large Savings Large Owner's Eq Large Other Borr’gs Medium Capital Tiny

Income Statement Production/ Svc.Financial Services SalesTotal Interest Income - COGS - Total Interest Expense = Gross Margin= Net Interest Income - Optg Exp + Non-Interest Income = EBIT - Non-Interest Expense - Interest Exp - Provision for Loan Losses = EBT = Pre-tax Optg Income - Tax+/- Securities Gains/Losses = Net Income - Income Taxes +/- Extraordinary Items = Net Income

FDIC Database of Fin’l Stmts. Click on “Institution Directory” Click on “Find Institution” EDGARSCAN…… Benchmarking Assistant

First off…. Let’s understand what we’ve been given before we even think about where we’re going….. Let’s concentrate on the statement in your packet: Yr. 1 Qtr. 4

Income Statement Y1Q4 Operating Income Interest income Loans and mortgages Securities Federal funds sold Total interest income Service charge income Fees and other income Gross operating income

Income Statement Y1Q4 Operating Expenses Salaries and benefits Interest expenses Interest on deposits Interest on capital notes FRB and fed fund borrowing Total interest paid Provision for loan losses Occupancy expense Business development Other expenses Total operating expenses

Income Statement Y1Q4 Gross operating income Total operating expenses Income before taxes and securities Applicable taxes Gain on securities/loans (after taxes of.349 & 1.452) Net income Dividend declared3.3 Increase in equity

Balance Sheet Assets Cash and due from banks Federal funds sold Investment securities Treasury bills U.S. Government notes State and muni securities Total securities

Balance Sheet Loans and mortgages (less provision for loan losses) Bank premises less depreciation ( & ) Other assets Total assets

Balance Sheet Liabilities and equities Demand deposits Time deposits Total deposits Federal funds purchased Funds borrowed from FRB0.000 Dividend payable3.300 Accrued taxes Other liabilities Total liabilities

Balance Sheet Capital notes and equity Capital notes Common stock ($10.00 par30 Issued:3.000 & million) Surplus Retained Earnings Total equity * Total liability & capital * Total qualifying capital FRB capital adequacy ratio

Analysis #1: Spread Spread = NII / Assets * 4 (Roughly) NII = – = ( Net Interest Income = Total Interest Income – Total Interest Expense ) Spread = / * 4 = 3.84%

Observations about Y1Q4 Interest income up, but expenses up more so overall net was down from Y1Q3. Quick review shows Fed Fund sales (income) became Fed Fund borrowing (expense), although there was added income from securities investment.