Tuesday, January 21, 2014

Southwest State Bank Case Analysis

southwest responsibility desire Q1: Southwest affirm chase shows higher(prenominal) profitability than peers in 1998. ROE ratio of Southwest discriminate savings bank is 3.16% leading than its peers. ROE ratio comes from the division of flake out Income and Total Equity, which measure the ability to generate Net Income by using the Equity. Higher ROE of Southwest State lingo is attri barelyed to the higher ROA, not Equity Multiplier (EM) which is 10 terra firma points pass than peers. Southwest State cant has 500 foundation robe point higher ROA rate than our peers which means we have overmuch stronger ability to get returns. Lets see work out of getting higher ROA ratio. Southwest State Bank has every(prenominal) cut asset enjoyment (AU); expenditure proportion (ER) and assess Ratio (TAX) than peers. ROA is equal to AU minus ER and TAX. Asset Utilization is 0.6% visit than peers which show the weakness of Southwest State Banks income generation. But 0 .57% lower TAX apprize almost offsetting this weakness. However, Southwest State Bank does well on tyrannical get down that come up with 0.56% lower put out down Ratio relative to peers. Therefore, Southwest State Bank presents break off ROA. Southwest State Banks lower Expense Ratio is a result of lower pertain disbursement and non- reside outgo. The first promoter on better(p) controlling expense is interest expense.
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The total interest expense of Southwest State Bank is 0.24% lower versus peers, which include the interest on CDs over $100M (0.83% less), Total deposits (1.14% less) and so on. But the a lmost important parts are the first of fund! s from gold grocery deposit accounts and Time deposits low $100M. Money market deposit accounts which demand to pay lone(prenominal) a critical interest to our depositors are 20.40% higher than peers, but Time deposits which need pay a lot interest are 14.84% lower than our peers. Therefore, the cost of fund in Southwest State Bank is much lower than peers. The second factor is non-interest expense including personnel, Occupancy, and different operating expense is lower than peers...If you lack to get a full essay, order it on our website: OrderCustomPaper.com

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