The Big Apple Bank has the following common size income statement where each item is as a % of total average assets (from its Uniform Bank Performance Report) Earnings and Profitability Analysis (% Ave. Total Assets)

2016 2015

Total Interest Income (IR%) 3.69 3.25 Total Interest Expense(IE%) 0.40 0.35 Net Interest Income (NIM) 3.29 2.90 Total Non-interest Revenues (NIR%)1.34 1.50 Total Non-Interest Expense (NIE%) 2.74 2.50 Burden % 1.40 1.00 Provision for Loan Losses (PLL%) 0.17 0.60 Pretax Operating Income (OROA%) 1.72% 1.30%

Equity to Assets 10.01% 8.00%

a. Explain precisely why Big Apples OROA went up in 2016?

b. Given the change in NIM with a rise in rates in 2016, what type of funding gap did the bank likely have?

c. What was the banks asset utilization each year? (Hint AU = IR% + NIR%)

d. Given the OROA & AU, what was the NPM each year for the bank? Hint: (NPM = OROA/AU (as a fraction)]

e. What were the OROEs each year? (Hint OROE = OROA x EM

f. Do a Dupont Analysis for the trends in OROE where OROE = NPM x AU x EM looking at trends in the net profit margin, asset utilization, and equity multiplier to explain why the OROE went up in 2016.