First Mid west Bancorp, Inc. (Term Paper Sample)

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First Mid west Bancorp, Inc.,
One Pierce Place,
Suite1500Itasca,
IL 60143(630) 875-7450
THE FIRST MIDWEST BANK COMPANY PROFILE
The First Midwest Bank Company is a holding company with its headquarters in Chicago in Illinois. It provides banking services at retail and commercial services. Their customers include commercial and industrial entities as well government and the general public. Their total assets are over $ 8 billion and have management of wealth asset of over$ 6.7 billion. It accepts deposits, issue loans, retirement package and investment packages. It has over a 100 branches. They serve all areas and customers from all industries.
Calculate the Financial Institution’s:
YEAR 2013
ROE and ROA
Return on equity
ROE=net income/shareholders equity
=79,306/1,001,442=0.07919
A profitability ratio on Midwest bank indicates how its uses contribution from shareholders to earn profits for the firm. From the above ratio Midwest bank earned 0.079 fr0m every $1 invested by the shareholders.
Return on assets
ROA=NET INCOME/AVERAGE TOTAL ASSETS
=79306/8176623=0.009699
0.97%
This ratio indicates the ability of Midwest bank in utilizing its assets in contributing to the firm’s profitability. This means the firm assets only returns 0.97% of the firms net income hence they are not being used optimally.
Equity Multiplier
=TOTAL ASSETS/TOTAL STOCKHOLDERS EQUITY
=$ 8,253,407/1,001,442
=8.24
This is a liquidity ratio and indicates amounts Midwest bank assets that are financed by the shareholders equity. In 2013 the bank had a higher ratio of the equity multiplier meaning that more assets were debt financed hence higher risks to its creditors.
Profit Margin
Profit Margin= (net income/total operating income),
=79306/128,021
=0.62
62%
This ratio is used by mid west bank to determine how the firms earns profit at each level of sales it makes. The firm converted 62% of its sales in 2013 into profit and therefore this is an indicator of profitability by the firm.
Other ratios
Interest income/total operating income,
=239,224/128,021
=1.87
Provision for loan loss/total operating income,
= 16,257/128,021
=0.13
Non-interest expense/total operating income
=256,737/128,021
=2.01
Income taxes/total operating income (for banks)
=48,715/128,021
=0.38
Asset Utilization (total operating income/total assets),
=128,021/8,253,407
=0.0155
Interest income/total assets
=239,224/8,253,407
=0.94
Non-interest income/total assets (for banks).
=140,883/8,253,407
=0.017
YEAR 2012
ROE and ROA
ROE=net income/shareholders equity
= (21,054)/ 940,893
=-0.0053
ROA=NET INCOME/AVERAGE TOTAL ASSETS
= (21,054) / 8036716.5= -0.0026
=O.26%
Equity Multiplier
=TOTAL ASSETS/TOTAL STOCKHOLDERS EQUITY
=$ 8,099,839/940,893
=8.61
Profit Margin (net income/total operating income),
= (21,054)/ (49,936)
=0.42
Interest income/total operating income,
=248,752/ (49,936)
= -4.98
Provision for loan loss/total operating income,
= 158,052/ (49,936)
= -3.17
Non-interest expense/total operating income
=267,500/ (49,936)
=-5.36
Income taxes/total operating income (for banks)
= (28,882)/ (49,936)
=0.58
Asset Utilization (total operating income/total assets),
= (49,936)/ 8,099,839
=0.0062
Interest income/total assets
=248,752/8,099,839
=0.03
Non-interest income / total assets (for banks).
=109,948/8,099,839
=0.014
The Comparison of financial ratios for analysis in 2013 and 2012.