3/31/21 Bank 6.19 1 High Plains Bank, Flagler, CO 2 Summary Ratios, UBPR Page 1 3 Earnings & Profitability 4 10 5 60 % of Average Assets % Interest Income (IR%) Bank is High Plain PG7 is the average of similar size banks This is an income statement for the bank as a percentage of average assets 3/31/21 3/31/20 3/31/20 PG7 Bank PG7 3.71 5.20 4.35 7 Interest Expense (IE%) 0.38 0.37 0.51 0.70 8 Net Interest Income (NIM) 5.81 3.34 4.69 3.65 9 Non-Interest Income (NIR%) 0.52 0.59 0.47 0.57 10 Non-interest expense (NIE%) 2.93 2.49 3.46 2.86 11 Burden % 2.41 1.90 2.99 2.29 12 Provision for Loan Loss % 0.00 0.06 0.26 0.10 13 Operating Income (OROA) 3.40 1.38 1.44 1.26 14 Security Gain or Loss % 0.00 0.01 0.00 0.02 15 Net Income after taxes (ROA) 3.40 1.24 1.44 1.10 16 Includes all adjustments 17 3/31/20 3/31/20 18 Tier 1 Leverage Ratio 19 (Equity/Assets) 3/31/21 3/31/21 Bank PG 7 Bank PG 7 8.92 10.16 10.20 11.13 Do a Dupont Analysis: Trend and Peer Comparison. ROE = AU NPM EM 1. Make a chart of ROE, ROA, AU, NPM, and EM for each year for the Bank and for the PG7. ROA and the figures to use to calculate AU, NPM, and EM are provided on the excel spreadsheet under that tab Earnings and Profitability. AU is calculated as the IR% + NIR%; NPM is calculated as ROA / (AU as a fraction), EM is calculated as 1 (Tier 1 Leverage Capital as a fraction). ROE is calculated as ROA EM. Explain based on the trends in AU, NPM and EM why the Bank's ROE changed in 2021 and why the Bank's ROE differs from the PG7. What strengths/weaknesses are revealed? Calculation for AU & NPM & EM Example: Suppose ROA is 1%, Tier 1 Leverage Capital is 8%, IR% = 6% and NIR% = 1%, what are the AU, NPM, EM, and ROE for the Bank? AU = IR% of 6% + NIR% of 1% = 7%. NPM = ROA / AU as a fraction = 1% / .07 = 14.29% EM = 1 /Tier 1 Capital as a fraction = 1 / .08 = 12.5 ROE = ROA EM = 1% x 12.5 = 12.5%. (Check: ROE = NPM x AU x EM = 14.29% x .07 x 12.5 = 12.5%)