Returns (Tab)
The first thing to take a look at is the sample spreadsheet for a bank as demonstrated in the Banking Basics section (pgs 19-21) of Money Basics by Christopher D. Moore, 2003 showing idealized ROE, ROA, Ratios, etc. Note the Operating Ratios and Performance figures. These were the minimums when Moore wrote the article in 2003. They may have changed since then, in light of the 2008-09 banking crisis and other legislation and may just be different in your jurisdiction. Risk weightings may have also changed or just be different in your area. It is up to you to find out the current minimums to meet, as well as other regulatory requirements.
Sample Public Bank Worksheet
It is suggested that you leave this sample page on the final spreadsheet, at least until you are sure of the final product for your state, city or region. You may need to refer to it. Throughout this example, we will try to keep our Operating Ratios and Performance close to these sample ratios, except for year 1, when the bank is just starting.
To customize the spreadsheet for your region, you'll need to replace "Oakland, CA" in the Header section of the spreadsheet. Note: moderate proficiency in Microsoft Excel is assumed throughout this document.
The following are explanations for assumptions and figures used in the workbook. Please refer to the appropriate section when reading over the following.
The Returns spreadsheet shows the first eight years, labeled Year 1 through Year 8, each on its own page. The reason for this is the first two years have lower returns since loans are just being made and there are little to no retained earnings. In years 3 and beyond, the bank will start receiving significant returns on lending and begin to pay back the initial equity. Therefore, we have to set aside $25m in Common Stock so that Liabilities + Equity = Total Assets (more on this later). An 8-year picture provides a reasonable look at the ramp up of the bank without getting too speculative about the out years.
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