1. By Community Investors

2. HOW THEY MAKE MONEY Cash in as Deposits & Interest on Loans out Services NET INTERESTINCOME Difference between 1.Interest Income - received from loans 2.Interest Expense – paid out on deposits 3.Sensitive to general interest rates 4.Fairly Cyclical NON-INTERST INCOME Fees from Services Less Cyclical

3. BANK’S REVENUE BREAKDOWN Percentage from Net Interest Income Percentage from Noninterest Income Higher percentage from Noninterest Income= Less Volatile Revenues DEBT RATIOS Normally up to 60% for Banks Debt-to-Capital ratios misleading Best to compare between Banks

4. NET INTEREST MARGINS Difference between Interest received on loans & Interest paid on Deposits Higher when interest rates falling Measure of Managements Performance Info missing from Valueline Reports Standard & Poor’s Reports show last 10 yrs Included on: 10-Ks & Websites Higher is better when selecting stocks

5. EFFICIENCY RATIO Control of Noninterest Costs (Noninterest Expense/Total Revenue) – Interest Expenses Lower is Better OTHER BANK QUALITIES Types Of Loans Made Geography How well they collect on loans How well they account for loans it won’t collect Learn fro 10-Ks 1.Item 1 (Business Section) 2.Item 7 (Management Discussion & Analysis

6. http://www.fdic.gov/index.html http://lawprofessors.typepad.com/banking http://www.banking.senate.gov http://www3.ambest.com/banks/default.asp http://www.bankstocks.com