Understanding the Uniform Bank Performance Report (UBPR)

Introduction to the UBPR
 
(Uniform Bank Performance Report)
 
1
 
Today’s Agenda
 
What will we cover today regarding the UBPR?
 
1.
Introduction to the UBPR – 
What is it?  Who uses it? What does it contain?
2.
How can you get the UBPR?
3.
Case Study – Valhalla Commerce Bank – 
Director and Officer Use of the UBPR
 
The “Director’s Dozen” – 12 Important Issues to Consider
1.
Page 1 Summary Ratios
2.
Page 3 Noninterest Income and Expenses
3.
Page 3 Cost of Funds
4.
Page 4 Balance Sheet
5.
Page 4 Balance Sheet – Liabilities
6.
Page 5 Off-Balance Sheet Items and Peer Comparison
7.
Page 7B Loans – Concentrations
8.
Page 8 Analysis of Past Due and Nonaccrual Loans
9.
Page 7 Analysis of Credit Allowance and Loan Mix
10.
Page 10 Liquidity and Funding
11.
Page 10A Liquidity and Investment Portfolio
12.
Page 11A Capital Analysis
 
2
 
Objectives
 
Obtain a better understanding of the information
in the UBPR and where it comes from
 
How to get a UBPR for any insured bank
 
Learn some basic information about the UBPR
 
Learn some key ratios to evaluate a bank’s
performance
 
3
 
UBPR Data Source
 
Consolidated Reports of Condition and Income (Call
Reports) are the only data source for the UBPR
 
Banks provide Call Reports data quarterly
 
Accuracy of the Call Report data is crucial
 
At least two directors and an executive officer are required to
attest to accuracy of Call Report
 
4
 
Overview of the UBPR
 
An analytical tool for regulatory agencies, the
public, and bank management
 
Aids in evaluating Capital, Asset Quality,
Earnings, Liquidity, and Sensitivity to Market
Risk for examination purposes
 
5
 
Overview of the UBPR 
(continued)
 
Data is shown for a specific bank and peer group
 
Bank data includes performance ratios,
percentages, and actual dollar amounts
 
Data is provided for five periods
 
Data is organized into summary ratios, income
statement information, and balance sheet
information
 
6
 
How to Obtain UBPRs
 
 
FDIC’s website at 
www.fdic.gov
 
 
FFIEC’s website at 
www.ffiec.gov
 
 
7
 
USING THE UBPR
 
 
Introduction/cover page of the UBPR provides
some general information about the bank.
 
Percentile rankings are presented to the right
of most of the individual and peer group ratios
throughout the UBPR.
 
8
 
RATIO ANALYSIS
 
Level and Trend
 
Interrelationship between ratios
 
No single ratio, percentile ranking, or trend is
indicative of a bank’s financial condition
 
Comparison to similar banks
 
9
 
A WALKTHROUGH OF CERTAIN PAGES
OF THE UBPR
 
 
The “Director’s Dozen”
 
Valhalla Commerce Bank
 
10
 
Director’s Dozen – Issue 1
Summary Ratios
 
11
 
UBPR page 1
Summary Ratios 
Net Income
results stand out
as very
noteworthy.
 
Why?
 
What is the Net Interest Margin telling us?
 
Director’s Dozen – Issue 2
Noninterest Income and Expenses
 
12
 
Page 3 of UBPR 
“Noninterest Income
and Expenses” shows:
Comparatively high costs versus
peer group in occupancy – Why?
Comparatively low assets per
employee – Why?
Comparatively low loan yields –
What may be going on?
 
Director’s Dozen – Issue 3
Cost of Funds
 
13
 
Page 3 
provides more information
on the Cost of Funds
 
Note the mixed picture
of the bank’s funding
costs.  The bank is above
market on most, but not
all deposit groups.
 
Director’s Dozen – Issue 4
Balance Sheet
 
14
 
Page 4
How has the bank’s
balance sheet changed
recently?
 
Substantial, rapid
loan growth
 
Selling securities
and eliminating
Federal Funds
sold
 
The “footings”
remain the same
– but the bank is
vastly
 different
 
Director’s Dozen – Issue 5
Balance Sheet - Liabilities
 
15
 
Page 4 Liabilities
How has the bank’s
liabilities mix changed?
Is it for the better?
 
Significant decline in
Demand Deposits and
a Core Deposits
 
What may be
happening?
 
Capital structure
changes?
 
Director’s Dozen – Issue 6
Off-Balance Sheet Items
 
Page 5 Off-Balance Sheet items
 
16
 
Real estate related
items have grown
significantly.
 
Construction and
land development
items are
significant.
 
What issue does
this create for
management?
 
Total Off-Balance Sheet items have grown rapidly.
Is the total volume of concern?
 
Director’s Dozen – Issue 6 (continued)
Off-Balance Sheet Peer Comparison
 
Page 5 Off-Balance Sheet items – Peer Comparison
 
 
17
 
What is happening here?
Is this a concern?
 
The bank is an outlier
compared to Peer
 
Total Off-Balance Sheet Items (primarily loans) are substantial and
significantly elevated as compared to Peer banks
 
Director’s Dozen – Issue 7
Loan Concentrations
 
18
 
What about the bank’s largest asset, 
LOANS
?
Is there anything concerning here?
 
Financial Institution Letter 
104-2006
 
entitled
Commercial Real Estate Lending Joint
Guidance
100% ADC concentration 
[as % of Total Capital]
300% CRE concentration
 
“…[these] 
supervisory criteria may be
identified for further supervisory analysis of
the level and nature of its CRE concentration
risk
.”
 
What about 
Total Real Estate 
concentration?
Peer analysis?
 
Page 7B – A very important UPBR page
 
Director’s Dozen – Issue 8
Past Due Loans
 
19
 
We have learned a lot about the Loan mix at
the bank, but how is the portfolio
performing?
 
Page 8 Analysis of Past Due and Nonaccrual
Loans
 
ADC/CRE concentrations are high, but
appear to be performing well.
 
Director’s Dozen – Issue 9
Loan Loss Reserve
 
20
 
Page 7 Analysis of Credit
Allowance and Loan Mix
 
Most recent quarter
provision expense
 
Average Total Loans are
up $11 million over past
12 months
 
No loan losses or
recoveries over past 12
months
 
The bank’s Loan Loss Reserve balance is low
compared to Peer, but does this tell us whether it is
appropriately funded?
 
Director’s Dozen – Issue 10
Liquidity and Funding
 
21
 
Page 10 Liquidity and Funding
 
As stated in a previous slide,
Core Deposits
 are shrinking,
yet mirror current Peer
average.
Net Non Core Funding
Dependence is rising
 
The Loan-to-Deposit Ratio is
increasing, relatively high,
and well above Peer.
 
How does that affect the
bank?
 
Brokered deposits are relatively low and not a
significant source of funds for the bank.
 
Director’s Dozen – Issue 10 
(continued)
Liquidity and Funding
 
22
 
Page 10 Liquidity and Funding
(continued)
 
Over the past 12 months:
 
Total deposits have
increased slightly
Core deposits have
declined
FHLB borrowings have
increased, and
The bank now borrows
Federal Funds
 
Most concerning is the rapid growth and reliance upon Non Core funding –
nearly doubling
.  What problems does this present management?
 
Director’s Dozen – Issue 11
Investment Portfolio
 
23
 
Page 10A Liquidity and Investment Portfolio
 
Information from this page is mixed….
 
Short term investments are very low as a
percent of Total Assets, and very low versus
Peer.
 
In the Securities Mix there is a bright spot –
the bank’s portfolio consists of 100% US
Treasury and Agency Securities…
 
Why is this positive for VCB?
 
Pledging is moderate.
 
Director’s Dozen – Issue 12
Capital Analysis
 
24
 
Page 11A Capital Analysis
 
Tier 1 Leverage Capital
is the primary ratio
regulators watch
 
VCB scores in the lowest
quartile of banks for Tier
1 Capital
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The Uniform Bank Performance Report (UBPR) is a crucial tool used by regulatory agencies, the public, and bank management to evaluate a bank's performance in areas such as capital, asset quality, earnings, liquidity, and market risk sensitivity. This report provides detailed data on a bank's financial health, including key ratios, income statement information, and balance sheet details. Learn about the purpose of the UBPR, how to access it, and its significance in analyzing a bank's operations.


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  1. Introduction to the UBPR (Uniform Bank Performance Report) 1

  2. Todays Agenda What will we cover today regarding the UBPR? 1. 2. 3. Introduction to the UBPR What is it? Who uses it? What does it contain? How can you get the UBPR? Case Study Valhalla Commerce Bank Director and Officer Use of the UBPR The Director s Dozen 12 Important Issues to Consider 1. Page 1 Summary Ratios 2. Page 3 Noninterest Income and Expenses 3. Page 3 Cost of Funds 4. Page 4 Balance Sheet 5. Page 4 Balance Sheet Liabilities 6. Page 5 Off-Balance Sheet Items and Peer Comparison 7. Page 7B Loans Concentrations 8. Page 8 Analysis of Past Due and Nonaccrual Loans 9. Page 7 Analysis of Credit Allowance and Loan Mix 10. Page 10 Liquidity and Funding 11. Page 10A Liquidity and Investment Portfolio 12. Page 11A Capital Analysis 2

  3. Objectives Obtain a better understanding of the information in the UBPR and where it comes from How to get a UBPR for any insured bank Learn some basic information about the UBPR Learn some key ratios to evaluate a bank s performance 3

  4. UBPR Data Source Consolidated Reports of Condition and Income (Call Reports) are the only data source for the UBPR Banks provide Call Reports data quarterly Accuracy of the Call Report data is crucial At least two directors and an executive officer are required to attest to accuracy of Call Report 4

  5. Overview of the UBPR An analytical tool for regulatory agencies, the public, and bank management Aids in evaluating Capital, Asset Quality, Earnings, Liquidity, and Sensitivity to Market Risk for examination purposes 5

  6. Overview of the UBPR (continued) Data is shown for a specific bank and peer group Bank data includes performance ratios, percentages, and actual dollar amounts Data is provided for five periods Data is organized into summary ratios, income statement information, and balance sheet information 6

  7. How to Obtain UBPRs FDIC s website at www.fdic.gov FFIEC s website at www.ffiec.gov 7

  8. USING THE UBPR Introduction/cover page of the UBPR provides some general information about the bank. Percentile rankings are presented to the right of most of the individual and peer group ratios throughout the UBPR. 8

  9. RATIO ANALYSIS Level and Trend Interrelationship between ratios No single ratio, percentile ranking, or trend is indicative of a bank s financial condition Comparison to similar banks 9

  10. A WALKTHROUGH OF CERTAIN PAGES OF THE UBPR The Director s Dozen Valhalla Commerce Bank 10

  11. Directors Dozen Issue 1 Summary Ratios UBPR page 1 Summary Ratios Net Income results stand out as very noteworthy. Why? What is the Net Interest Margin telling us? 11

  12. Directors Dozen Issue 2 Noninterest Income and Expenses Page 3 of UBPR Noninterest Income and Expenses shows: Comparatively high costs versus peer group in occupancy Why? Comparatively low assets per employee Why? Comparatively low loan yields What may be going on? 12

  13. Directors Dozen Issue 3 Cost of Funds Page 3 provides more information on the Cost of Funds Note the mixed picture of the bank s funding costs. The bank is above market on most, but not all deposit groups. 13

  14. Directors Dozen Issue 4 Balance Sheet Page 4 How has the bank s balance sheet changed recently? Substantial, rapid loan growth Selling securities and eliminating Federal Funds sold The footings remain the same but the bank is vastly different 14

  15. Directors Dozen Issue 5 Balance Sheet - Liabilities Page 4 Liabilities How has the bank s liabilities mix changed? Is it for the better? Significant decline in Demand Deposits and a Core Deposits What may be happening? Capital structure changes? 15

  16. Directors Dozen Issue 6 Off-Balance Sheet Items Page 5 Off-Balance Sheet items Real estate related items have grown significantly. Construction and land development items are significant. Total Off-Balance Sheet items have grown rapidly. Is the total volume of concern? What issue does this create for management? 16

  17. Directors Dozen Issue 6 (continued) Off-Balance Sheet Peer Comparison Page 5 Off-Balance Sheet items Peer Comparison The bank is an outlier compared to Peer What is happening here? Is this a concern? Total Off-Balance Sheet Items (primarily loans) are substantial and significantly elevated as compared to Peer banks 17

  18. Directors Dozen Issue 7 Loan Concentrations Page 7B A very important UPBR page What about the bank s largest asset, LOANS? Is there anything concerning here? Financial Institution Letter 104-2006 entitled Commercial Real Estate Lending Joint Guidance 100% ADC concentration [as % of Total Capital] 300% CRE concentration [these] supervisory criteria may be identified for further supervisory analysis of the level and nature of its CRE concentration risk. What about Total Real Estate concentration? Peer analysis? 18

  19. Directors Dozen Issue 8 Past Due Loans Page 8 Analysis of Past Due and Nonaccrual Loans We have learned a lot about the Loan mix at the bank, but how is the portfolio performing? ADC/CRE concentrations are high, but appear to be performing well. 19

  20. Directors Dozen Issue 9 Loan Loss Reserve Page 7 Analysis of Credit Allowance and Loan Mix Most recent quarter provision expense Average Total Loans are up $11 million over past 12 months No loan losses or recoveries over past 12 months The bank s Loan Loss Reserve balance is low compared to Peer, but does this tell us whether it is appropriately funded? 20

  21. Directors Dozen Issue 10 Liquidity and Funding Page 10 Liquidity and Funding As stated in a previous slide, Core Deposits are shrinking, yet mirror current Peer average. Net Non Core Funding Dependence is rising The Loan-to-Deposit Ratio is increasing, relatively high, and well above Peer. How does that affect the bank? Brokered deposits are relatively low and not a significant source of funds for the bank. 21

  22. Directors Dozen Issue 10 (continued) Liquidity and Funding Page 10 Liquidity and Funding (continued) Over the past 12 months: Total deposits have increased slightly Core deposits have declined FHLB borrowings have increased, and The bank now borrows Federal Funds Most concerning is the rapid growth and reliance upon Non Core funding nearly doubling. What problems does this present management? 22

  23. Directors Dozen Issue 11 Investment Portfolio Page 10A Liquidity and Investment Portfolio Information from this page is mixed . Short term investments are very low as a percent of Total Assets, and very low versus Peer. In the Securities Mix there is a bright spot the bank s portfolio consists of 100% US Treasury and Agency Securities Why is this positive for VCB? Pledging is moderate. 23

  24. Directors Dozen Issue 12 Capital Analysis Page 11A Capital Analysis Tier 1 Leverage Capital is the primary ratio regulators watch VCB scores in the lowest quartile of banks for Tier 1 Capital 24

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