Super Savings Bank (SSB) and for comparison the average for Peer Banks of the same size has the following common size income statement where each item is as a % of total average assets from its Uniform Bank Performance Report Earnings & Profitability Analysis (% Ave. Total Assets). Peers is the average for other banks of similar size for comparison.

2017 Peers 2016 Peers

Interest Income (IR%) 5.31 3.71 5.28 3.68

Interest Expense(IE%) 1.00 0.55 0.93 0.54

Net Interest Income (NIM%) 4.31 3.16 4.35 3.14

Non-interest Revenues (NIR%) 0.09 0.58 0.11 0.61

Non-Interest Expense (NIE%) 2.05 3.03 2.07 3.10

Burden % 1.96 2.45 1.96 2.49

Provision for Loan Losses (PLL%) 0.00 0.06 0.02 0.05

Pretax Oper. Income (OROA%) 2.35 0.65 2.37 0.60

Equity to Assets % (Tier 1 cap. Ratio) 12.64 13.14 12.22 12.81

a. Explain precisely why Super Savings has a higher OROA than its Peer Banks in 2017 and 2016 in terms of its NIM, Burden% and PLL% (be sure to go into detail explaining the reason for differences in the NIM based on differences in the IR% and IE%, and Burden based on differences in the NIR% and NIE%).

b. Given the trend in NIMs for both Super Savings Bank and the Peers for 2016 to 2017 if rates rose slightly in 2017, explain what type of funding gap (close to zero, negative or positive) did Super Savings Bank and the Peers likely have?

c. What was Super Savings Bankss asset utilization (AU) in 2017, and what was the Peer asset utilization in 2017 ? (Hint AU = IR% + NIR%)

d. Given the OROA & AU, what was the NPM for Super Savings Bank in 2017 and for the Peer Banks in 2017?

Hint: (NPM = OROA/AU (as a fraction)]

e. What were the Equity Mulitpliers (EM) and OROEs for SSB and the Peers in 2017? (Hint OROE = OROA x EM; and EM = 1/ (Equity to Assets as a fraction)

f. Do a Dupont Analysis to analyze why SSB had a higher OROE than the Peers in 2017?

looking at trends in the NPM, AU, and EM to explain why SSBs OROE was higher than the Peers in 2017. {Hint OROE = NPM x AU x EM}