Bank Profitability & Performance Management BankAnalytics Measures General Ledger Measures At-a-Glance One of the most fundamental analyses any financial services business can perform during their normal operating cycles is on balance sheet and income statement information. Not only is such analyses necessary as an overall indicator of financial and operational performance, but also to ensure compliance with banking regulations and statutory requirements. With BankAnalytics, financial managers are able to easily reconcile line-of-business performance and management information with the bank’s statutory Chart of Accounts. BankAnalytics collects financial information from any General Ledger system and presents a comprehensive GAAP-compliant view of: Average Balance Interest Income Non-Interest Income Interest Expense Non-Interest Expense Cost of Funds Credit for Funds Spread Yield BankAnalytics delivers a powerful, flexible General Ledger reporting environment, enabling analysts and managers to create and maintain both standard financial statements as well as dynamic, drillable management reports, without the need for IT development or support. BankAnalytics' ability to collect, cleanse and consolidate General Ledger transactions into a logical analytical framework allows business managers to explore causal relationships (e.g. by temporarily re-organizing the Chart of Accounts into alternate hierarchies to gain new insight and additional meaning), and enables the "Analytics-Assisted Close" (i.e. leveraging real-time analytics capabilities to quickly pinpoint and drive the necessary adjusting journal entries). Account Measures At-a-Glance Analyses of account measures can be performed on any timeframe (e.g. current period, rolling 3 periods, fiscal quarter or year), time series (e.g. current vs. last year), and by any type of consolidation path (e.g. by branch, region, officer, instrument type). BankAnalytics' powerful ranking, trending and benchmarking capabilities, delivered through its rich and intuitive graphical interface, provide a fact-based decision-making environment for identifying cross-selling opportunities, optimizing pricing and margins, and seeing "total customer" contribution to profitability. BankAnalytics allows business managers at all levels to analyze and compare a multitude of banking metrics and measures, including: Number of Households, Customers, and Accounts Average Balance Ending Balance Cost of Fund / Credit for Funds Interest Income / Expense Cost of Funds APR Interest APR Spread Spread APR Costing Measures At-a-Glance Given the highly variable nature of costs in banking (for example, deposit accounts typically having much higher transaction costs than loan accounts), collecting the necessary transaction volumes and modeling the cost drivers requires a systematic approach and dedicated information technology. BankAnalytics incorporates non-interest income and expense, and integrates information from a company’s Activity-Based Cost (ABC) system if one is available. BankAnalytics enables bank personnel to view a true and accurate picture of account-level revenue, expense, and profit, with the following Key Performance Indicators: Operating and Non-Operating Income Operating and Non-Operating Expense Direct and Indirect Costs Fee Income and Fee Expense Deposits # of Deposit Items # of Checks Written # of Deposits by Type (ATM, EFT, Branch) # of Withdrawals by Type (ATM, EFT, Branch) # of Check Exceptions by Type (NSF, Stop Payments, Overdraft) Deposit Activity Flag New Deposit Account Flag Charge Off Deposit Account Closed Flag Statement Type Loans New Loan Account Flag Original Loan Amount Credit Line Early Payoff # of Payments Risk Management Measures At-a-Glance BankAnalytics incorporates operational and credit risk factors and integrates a company’s risk system if one is available. With the deployment of BankAnalytics, banks are enabled to make "apples-to-apples" comparisons among loan officers at the branch level, and to view loan activity on a level playing field that incorporates not just revenue and interest income, but also operational and credit risk factors such as collateral and obligor scores. BankAnalytics also provides insight into true profitability by industry sector, geography and lender (i.e. loan officer), offering the ability to monitor and modify lending behavior and policy as appropriate. For example, high-risk activities with low RAROC can be curtailed, with the converse scenario being incented. BankAnalytics provides insight into: Loan Equivalent Value Obligor Score (FICO) Collateral Score Expected Loss Rate Expected Loss Credit Risk Capital Rate Credit Risk Capital Operational Risk Capital Rate Operational Risk Capital Market Risk Rate Market Risk Total Capital BankAnalytics provides a means to verify, validate and true-up a bank’s RAROC model by delivering a timely feedback loop into the cause-and-effect relationship between the model’s input and output parameters. Profitability Measures At-a-Glance BankAnalytics' comprehensive analysis framework provides account-level, risk-adjusted economic profit, as well as ranking and trending of metrics that deliver a wide variety of optimization opportunities. BankAnalytics provides guidance to bank decision makers regarding specific customer loyalty and retention efforts (e.g. being able to confidently offer an optimal interest rate based on the true profitability of a given customer), and raises the evaluation criteria for what makes a "good" customer beyond simple average balances or interest income. This capability extends beyond single customers to branches, loan officers, demographic groups or industry segments. BankAnalytics provides views of: Net Interest Income Net Interest Margin Yield on Earning Assets Economic Profit Once integrated into a bank’s decision-making process, BankAnalytics is an enabler for identifying and exploiting cross-selling opportunities, ensuring high-profit customers are provided commensurate levels of service, and optimizing a given customer’s deposit and loan vehicles.
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