1. Exam 1 Review

2. Return on Assets (ROA) Spread = Net Interest Margin (NIM) Spread = Net Interest Margin (NIM) Total interest income minus total interest paid NIM*4/Assets = spread (annualized) Benchmark = 4%

3. Return on Assets (ROA) Burden = Net Non Interest Income Burden = Net Non Interest Income Non Interest Revenue Service charge income Fees Other Income Non Interest Expense Salaries and benefits Occupancy expense Business development Other Expenses Net Non Interest Income * 4/Assets = Burden Benchmark = -2%

4. Return on Assets (ROA) Other Things = other costs Other Things = other costs Other Costs Provision for loan losses Applicable taxes Gain on securities/loans (GAIN decreases OT; LOSS increases OT) Other costs * 4/Assets = Other Things Benchmark = 1%

5. Aggregated S&U S (+)U ( - ) Actual QTR.#_3.3_Results Supply of FundsUsage of Funds Net Securities Change-15.498 Demand Deposits -14.027Loans-49.488 Savings +35.246Prov for LL -0.511 Subtotal +21.219Subtotal-65.497 FF Purch+39.602FF Sold+0.000 Dividend payable0Premises-0.991 Accrued taxes-0.196Other Assets+0.162 Other liabilities-0.088Cash+1.664 Capital Notes-0.620 Retained Earnings+4.744 Total +64.661 Total -64.662

6. Sources & Uses Review S/U is from the balance sheet S/U is from the balance sheet S/U should balance S/U should balance List ALL items that changed List ALL items that changed What you say in narrative should be supported by the numbers in s/u What you say in narrative should be supported by the numbers in s/u + or - in s/u may be different from + or - in balance sheet change + or - in s/u may be different from + or - in balance sheet change

7. Summary Look for the BIG numbers Funds came from Funds came from  larger Savings increases over Demand Deposit losses  increases in Loans from other Banks (FF Purchased) and past Earnings Funds went to Funds went to  net increases in securities and Loans

8. Sources & Uses Review Is the bank expanding or shrinking and in what major areas? Is the bank expanding or shrinking and in what major areas? A ‘+‘ supply and ‘-’ usage = an expansion of assets in the bank as funding increases A ‘+‘ supply and ‘-’ usage = an expansion of assets in the bank as funding increases If “-” supply, “+” usage = contraction of assets of funding decreases If “-” supply, “+” usage = contraction of assets of funding decreases

9. Ratios Show 3 decimal places in most cases Show 3 decimal places in most cases PLL is from the P&L for ratios—it is what happened this period PLL is from the P&L for ratios—it is what happened this period Allowance from the Balance Sheet is aggregate total over time Allowance from the Balance Sheet is aggregate total over time OT (other things) are costs OT (other things) are costs Security GAINS decrease OT Security GAINS decrease OT Security LOSSES increase OT Security LOSSES increase OT

10. Double check for correct numbers Double check for correct numbers Copy numbers correctly Copy numbers correctly Use methods to check calculations like ROE and ROA—if they don’t equal find out why Use methods to check calculations like ROE and ROA—if they don’t equal find out why Read formulas—follow them Read formulas—follow them

11. Read my comments—ask if questions Read my comments—ask if questions If you got below 80 overall or 40 on either segment see me in my office If you got below 80 overall or 40 on either segment see me in my office Extra effort process Extra effort process Potential point increase Potential point increase Must do new problem entirely correct Must do new problem entirely correct Must score higher on Exam #2 to keep extra effort points from Exam #1 Must score higher on Exam #2 to keep extra effort points from Exam #1