FDIC Certificate # 8033 FRB District/ID_RSSD 6 / 680130 CITIZENS TRUST BANK ATLANTA, GA Summary Ratios OCC Charter # 0 County: FULTON Summary…

.COMMERCIAL BANK POLICY QUESTION!!
Use the attached UBPR data for Citizens Trust Bank (CTB) in Atlanta, GA (FDIC Cert. no. is 8033) to answer all parts of questions #2 through #9. Where appropriate, cite specific ratios that support your answers. The data appear for calendar years ending in 2011 – 2015.
Use data only for CTB and peer banks for Dec. 31, 2015 unless indicated otherwise. ***FILE IS ATTACHED***
3. Compare CTB’s return on equity (ROE) with peers in 2015 citing the figures. Who performed better for the year?
4. Compare CTB’s return on assets (ROA) with peers in 2015 citing the figures. Who performed better?
5. Use your answers to questions 2 & 3 to calculate each bank’s equity multiplier (EM). Show all work.
6. What does the difference in EMs between CTB and peers indicate about risk in 2015? Provide your reasoning.
7. Cite differences in the following figures between CTB and peers in 2015.
Indicate whether the ratio was better or worse for CTB versus peers
. Cite specific data.
a. Interest income / Total assets
b. Noninterest income / Total assets
Cite differences in specific figures between CTB and peers in 2015 for the following ratios.
Explain whether the ratio was better or worse for CTB versus peers
and why.
a. Interest expense / Total assets
b. Noninterest expense / Total assets
9. Describe the impact of each of the following on CTB’s
interest income
versus that for peers. Is the difference meaningfully large or small and does this help or hurt CTB in terms of its overall profitability versus peers? Cite relevant ratios to support your answer.
a. Rate effect
b. Mix effect
c. Volume effect
10. Describe the impact of each of the following on CTB’s interest expense versus that for peer banks. Is the difference meaningfully large or small and does this help or hurt CTB in terms of its overall profitability versus peers? Cite relevant ratios to support your answer.
11. Is CTB’s efficiency ratio above or below peers in 2015? Cite specific data to support your answer. Explain why CTB’s performance was either better or worse than peers.
12. Examine data for 2011 – 2015 to analyze CTB’s credit risk versus peers. Cite specific data (ratios) that relate to each of the following questions to support your answer. In each case, indicate whether CTB’s credit risk is greater or lower than that of peers.
a. What was CTB’s loan charge-off experience versus peers? Discuss the trend in a key ratio from 2011 – 2015. Did CTB do better or worse than peers in 2015 and over the five years in total? Explain.
b. How does CTB’s credit risk compare with peers in terms of non-current loans? Discuss the trend in a key ratio from 2011 – 2015. Did CTB do better or worse than peers? Explain.
c. How does CTB’s allowance for loan and lease losses (ALLL) relative to noncurrent loans compare with peers as of Dec. 31, 2015? Cite specific data/calculations to determine whether CTB has a sufficiently large ALLL.
d. Do the same analysis for the ALLL as in question c (just above), but use data for Dec. 31, 2011. Cite specific data/calculations. Evaluate the level of CTB’s ALLL at this point in time versus noncurrent loans. Explain.
e. Given your answers to questions #12 (parts a – d), would you expect CTB’s provisions for loan losses (as % of assets) to be higher or lower than peers in 2015 and over the 2011- 2015 period? Explain.
13. Two ratios regarding CTB’s pledged assets appear on page 10A of the UBPR with the associated peer data.
a. Explain whether a pledged asset is, or is not, liquid. Provide your reasoning
b. Using data for 2015, how does CTB’s liquidity compare with peers in terms of its pledged assets, that is, is CTB more or less liquid? Cite specific data in explaining your answer.
14. Suppose that a bank reports a negative provision for loan losses for the year. Will this increase or decrease the bank’s:
a. Net income (explain your answer)
b. ALLL (explain your answer)







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