Banks, Thrifts and Credit Unions

Banks, Thrifts and Credit Unions all are faced with low Return-on-Assets ratios. This fact makes it critical that the management of these institutions manage their income and expenses very closely. Speak to this low ROA as it relates to the management of interest rate margin, noninterest income and expenses, and loan loss reserves. Your explanation should clarify why it is that these financial institutions must be conservative as they chose where to invest their funds. You may be helped in your answer by the following information provided by Investopedia.
• What does the low Return-on-Assets mean to the bank manager and/or bank owner when reviewing the relationship between the ROA and ROE? • How does this affect the credit decision in the loan portfolio and the investment portfolio? • Discuss this article in light of what you have written in the first two questions.

 

 

 

 

 

Sample Solution

ACED ESSAYS