Name :

FINM 2 D

1. What is the use of financial ratios for financial institutions?

2. Use the financial statement below to compute and analyze the required ratios
Buena Vista Savings Bank
Statement of Financial Condition
December 31, 2015
ASSETS LIABILITIES & EQUITY
Cash & Due from Banks 320,000 Core Deposits 4,538,000
Due from BSP 286,000 Time Deposits 416,000
Investment Securities 1,321,000 Due to BSP 86,000
Net Loans & Leases 3,458,000 Other Borrowed Funds 48,000
Premises & Other Fixed Assets 73,000 Other Liabilities 24,000
Other Real Estate Owned 10,000 Common Stock 22,000
Other Assets 45,000 Surplus 113,000
Retained Earnings 266,000

5,513,000 5,513,000

Buena Vista Savings Bank

Statement of Comprehensive Income
For the period ended December 31, 2015
Interest Income 408,690
Interest Expense 185,062
Net Interest Income 223,628
Provision for loan losses 26,943
Net Interest Income after Provision for Losses 196,685
Other Income 72,388
Other Expenses
Salaries & Benefits 157,238
Occupancy Expenses 28,428
Miscellaneous 16,355
202,021
Net Interest Income before Taxes 67,052
Taxes 20,116
Net Income 46,936
a. Compute the 2015 financial ratios:
2015
RATIO Buena Vista Industry Average
Return on Equity 15.00%
Return on Assets 1.44%
Leverage Multiplier 10.4X
Net(Profit) Margin 14.80%
Asset Utilization 9.70%

b. Briefly comment on Buena Vista's profitability structure. What are its strengths & weaknesses?