To balance profitability and liquidity, management must carefully weigh the full return on liquid assets (yield plus insurance value) against the expected higher return associated with less liquid assets. Income derived from higher yielding assets may be offset if a forced sale is necessary due to adverse balance sheet fluctuations.

https://www.fdic.gov/regulations/safety/manual/section6-1.html#management

 

Five key ratios examiners look at when evaluating profitability

Submitted by sevans on Tue, 01/13/2015 - 3:29pm

When reviewing profitability, examiners may evaluate several fundamental ratios.  These include (1) the yield on assets, (2) cost of funds to average assets, (3) operating expenses to average assets, (4) net operating expenses to assets, and (5) return on average assets.

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