Galloping Merchants National Bank is a merchant banking firm located in Chicago, IL, USA. The Banks management wanted to evaluate its financial performance by applying key financial ratios.

a-Using the latest report of condition and income and expense statement calculate

the following performance measures:

1. ROA
2. Net Interest Margin
3. Asset Utilization Ratio
4. Expense Ratio
5. Equity Multiplier

b-Interpret the results Vs. the following industry average ratios:

Industry Average

ROA = 1%

NIM = 3%

AU = 10.5%

ER = 2.5%

EM = 10 X

 

Transcribed Image Text:

Galloping Merchants National Bank Report of Income "Amounts rounded to "000,000's" Interest Fees on Loans Interest Dividends on Securities Total Interest Income Interest Paid on Deposits Interest on Nondeposit Borrowings Total Interest Expense Net Interest Income Provision for Loan Losses Noninterest Income and Fees Noninterest Expenses: Total Assets Salaries and Employee Benefits Overhead Expenses Other Noninterest Expenses Total Noninterest Expenses Pre Tax Operating Income Securities Gains (or Losses) Pre Tax Net Operating Income Taxes Net Operating Income Net Extraordinary Income Net Income Galloping Merchant National Bank Report of Condition Cash and Due From Banks $100 Demand Deposits Investment Securities $150 Savings Deposits Federal Funds Sold $10 Time Deposits Federal Funds Net Loans Plant and Equipment $995 $670 Purchase $65 Surplus Retained Earnings Total Equity Shares of common stock outstanding $70 17 87 500 54 11 65 22 7 12 10 7 4 21 6 4 10 1 9 -1 $8 $175 $180 $470 $60 $25 $35 $110 Galloping Merchants National Bank Report of Income "Amounts rounded to "000,000's" Interest Fees on Loans Interest Dividends on Securities Total Interest Income Interest Paid on Deposits Interest on Nondeposit Borrowings Total Interest Expense Net Interest Income Provision for Loan Losses Noninterest Income and Fees Noninterest Expenses: Total Assets Salaries and Employee Benefits Overhead Expenses Other Noninterest Expenses Total Noninterest Expenses Pre Tax Operating Income Securities Gains (or Losses) Pre Tax Net Operating Income Taxes Net Operating Income Net Extraordinary Income Net Income Galloping Merchant National Bank Report of Condition Cash and Due From Banks $100 Demand Deposits Investment Securities $150 Savings Deposits Federal Funds Sold $10 Time Deposits Federal Funds Net Loans Plant and Equipment $995 $670 Purchase $65 Surplus Retained Earnings Total Equity Shares of common stock outstanding $70 17 87 500 54 11 65 22 7 12 10 7 4 21 6 4 10 1 9 -1 $8 $175 $180 $470 $60 $25 $35 $110

Answer rating: 100% (QA)

ANSWER 1CALCULATIONS ANSWER 2 BENCHMARKING TO INDUSTRY RATE 1 ROA Companys ROA is 080 while the indu... View the full answer