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Review and draw the bathtub flow model as it relates to: Provision for Loan Losses - Allowance for Loan Loss Account - Loan charge-offs
The faucet is the Provision for loan losses
The bath tub is the allowance for loan loss account
Loan Charge offs is the drain
the water stays in the tub by adequately allowing for charge offs in your provision for Loan Loss - the water becomes the net difference between the 2 (Your ALL)
Compare and Contrast a balance sheet versus an income statement
Balance sheet shows where you are for the year - running total
Income statement shows the quarter total - a snapshot of information for the particular point in time
Required ROA ratio definition
Capital Ratio x Asset Growth Rate = * Required ROA
(current/constant) x (choice / Variable) = dependent / variable - to keep CR constant
Basis Point - Percentage Points - Decimal Format
100 basis points = 1% = .01
30 basis points = .3% = .003
Required ROA ratio definition
Capital Ratio x Asset Growth Rate = * Required ROA
(current/constant) x (choice / Variable) = dependent / variable - to keep CR constant
Compare and Contrast a balance sheet versus an income statement
Balance sheet shows where you are for the year - running total
Income statement shows the quarter total - a snapshot of information for the particular point in time
Define Income Statement
shows financial flows over time.
Define Balance sheet
Shows the credit union's accounts at a point in time and the sources and uses of funds
Profit Margin Ratio
Q2 NI / Q2 Gross operating income
Asset Utilization Ratio
(Q2 gross operating income) * 4 / Q1 total assets
Return on assets ratio
(Q2 NI) *4 / Q1 Total Assets
Denominator
On bottom......numerator / denominator
Numerator
On top......numerator / denominator
Another name for leverage ratio
Equity multiplier
Equity multiplier ratio
EM = Assets / Equity
Return on Equity
ROE = (Q2 NI)*4 / Q1 Equity
Return on Equity
ROE = (Q2 NI)*4 / Q1 Equity
GAP Analysis Ratio Equation
^NII = $GAP * ^i
Ratio that measures a credit union's liquidity position