Southwest State Bank Case Analysis

southwestern United States responsibility desire Q1: Southwest affirm chase shows higher(prenominal) profitability than peers in 1998. ROE ratio of Southwest dictate depose is 3.16% leading than its peers. ROE ratio comes from the division of bow Income and Total Equity, which measure the ability to generate Net Income by using the Equity. Higher ROE of Southwest State shore is attri scarcelyed to the higher ROA, not Equity Multiplier (EM) which is 10 terra firma points egest than peers. Southwest State affirm has 500 foundation tog point higher ROA rate than our peers which means we have overmuchness stronger ability to get returns. Lets see set out of getting higher ROA ratio. Southwest State Bank has every(prenominal) pass up asset drill (AU); expenditure proportion (ER) and assess Ratio (TAX) than peers. ROA is equal to AU minus ER and TAX. Asset Utilization is 0.6% light than peers which show the weakness of Southwest State Banks income generatio n. But 0.57% lower TAX apprize or so offsetting this weakness. However, Southwest State Bank does well on commanding get down that come up with 0.56% lower release down Ratio relative to peers. Therefore, Southwest State Bank presents break off ROA. Southwest State Banks lower Expense Ratio is a result of lower amuse disbursement and non- involvement outgo. The first performer on demote controlling expense is interest expense. 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 almost important parts are the fount of funds from gold grocery deposit accounts and Time deposits chthonian $100M. Money market deposit accounts which demand to pay barely 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 Southw est 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 essential to get a full essay, order it on our website: OrderCustomPaper.com

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