After Turn 4

Growth accelerates — your loan portfolio expands again, and you fund it partly with low-cost checking deposits. The move improves your margin and finally brings you into profitability.

ROE climbs to 1.90%, and you’re now in the black. Net interest margin rises to 4.51%, helped by strong yields and steady funding costs. Net income is positive, though still modest.

Risk metrics, however, are beginning to show stress. Credit quality edges down to 719, and liquidity drops to 17.0%. Rate risk has worsened to -7.5%, with the bank becoming increasingly sensitive to falling interest rates.

It is the first profitable position, but also the first real sign that risk is accumulating. The  foundation seems set — what will management do next?