Bank Performance - Bank Performance Questions: Think like senior bank management

Think Like Senior Bank Management

Bank Performance Questions

Use these prompts as you review your bank’s performance profile and compare it to peers in the room. For each category, start with the Direct Measurement Questions to interpret the numbers, then move to the Further Discussion Questions to explore causes, risks, and strategic implications. Approach each area as if you’re part of senior management — deciding where to protect strengths, address weaknesses, and allocate resources.

Profile | Big-Picture Bank Characteristics

Before evaluating specific performance areas, it’s important to understand your bank’s overall size, structure, and footprint. Your profile — total assets, balance sheet composition, loan and deposit mix, and branch network — shapes both your strategic opportunities and your risk profile. Use these questions to compare your bank’s basic characteristics to peers and consider how these structural differences influence performance.

Direct Measurement Questions

How does your total asset size compare to peers in this room?
Is your bank’s asset size close to, or much larger/smaller than, the bank you’re paired with?
What is your loan-to-asset ratio, and how does it compare to peers?
Which loan category is the largest in your portfolio — and is it the same as most peers?
What is your deposit mix (DDA, interest checking/MMDA, savings, CDs), and which type is largest?
How many states does your bank collect deposits from compared to peers?
How many branches do you have, and is that more or fewer than peers of similar size?
Is your branch network concentrated or spread across multiple markets?

Further Discussion Questions

Does your asset size give you advantages in economies of scale, or does it limit competitive reach?
How does your balance sheet mix (loans vs. securities) influence your earnings potential and liquidity?
If your loan mix is concentrated, is it by strategic choice or market limitation?
How does your deposit mix affect funding cost and stability?
Does your geographic footprint make your bank more or less diversified in market risk?
How does your branch count influence your operating cost structure?
If your bank has a larger or smaller footprint than peers, how does that affect growth potential?
Are your profile characteristics well aligned with your long-term strategy, or are they a legacy of past decisions?

Return | Earnings Power and Profitability Drivers

Return measures how effectively your bank generates earnings relative to its assets and equity. Strong returns can come from efficient operations, a healthy margin, diversified income sources, and disciplined risk management — but they can also be inflated by one-time events or excessive leverage. Use these questions to evaluate whether your returns are sustainable, competitive, and aligned with your long-term strategy.

Direct Measurement Questions

How does your ROA compare to peers — higher, lower, or about the same?
How does your ROE compare to peers? Does it align with your ROA, or is leverage driving the difference?
Is your NIM higher or lower than your peers? By how much?
How does your yield on earning assets compare to peer averages?
Is your cost of funds significantly higher or lower than the bank you’re comparing to?
How much of your revenue comes from fees — more or less than peers?
Is your overhead ratio better (lower) or worse (higher) than peer averages?
Is your provision expense above, below, or near peers? Is it a material drag on earnings?

Further Discussion Questions

If ROE is high, is it driven by strong earnings, high leverage, or both?
If NIM is strong, is it due to pricing strategy, asset mix, or low funding costs?
If your cost of funds is low, is it because of strong core deposits or lagging rate adjustments?
If fee income is high, is it diversified or dependent on one major source (e.g., mortgage banking)?
How much of your overhead is basic structural cost?
If your provision expense is low, is that because credit is pristine, or are you taking more credit risk?
If you have strong earnings, how sustainable are they in a different rate environment?

Risk: Asset Quality | Credit Risk and Loan Portfolio Health

Asset quality reflects the strength of your loan portfolio and your ability to manage credit risk. Key indicators like non-performing loans (NPLs) and charge-offs reveal both current stress and potential future losses. Strong asset quality supports stable earnings and capital, while deterioration can quickly erode both. Use these questions to compare your bank’s credit risk profile to peers and identify whether trends point toward stability or emerging issues.

Direct Measurement Questions

How does your NPL% compare to peers — higher, lower, or about the same?
How does your charge-off ratio compare to peers — higher, lower, or about the same?
Is your NPL% close to, or far from, the peer you’re comparing to?
Have either metric improved or worsened over the past 12 months?
If both NPL% and charge-offs are low, do they confirm each other, or is there a lag between the two?

Further Discussion Questions

If charge-offs are elevated, is it concentrated in one large loan or spread across many?
What loan segments are driving your non-performers — CRE, C&I, consumer?
How do your underwriting standards compare to peers — more conservative or more aggressive?
Has your loan mix changed recently in ways that could affect future asset quality?
Has you recent provision expense been adequate to cover your NPL% — i.e. are you reserving enough?
If your asset quality looks stronger than peers, is it skill, luck, or market conditions?
Are your non-performers trending up in a way that’s likely to lead to higher charge-offs next year?

Risk: Liquidity | Funding Stability and Access to Cash

Liquidity measures your bank’s ability to meet obligations and fund growth without incurring excessive cost or risk. It comes from two main sources — asset liquidity (cash and marketable securities that can be sold quickly) and funding liquidity (the stability and cost of deposits and borrowings). The loan-to-deposit ratio (L/D) shows how fully you’re using your deposit base. Use these questions to evaluate whether your bank’s liquidity position is competitive, resilient, and adaptable to changing market conditions.

Direct Measurement Questions

Is your asset liquidity higher, lower, or about the same as peers?
What percentage of funding is from non-core sources — higher or lower than peers?
How does your L/D ratio compare to peers? Above 100%, below, or about the same?
What percentage of your securities portfolio is in Treasuries, MBS, Municipals, or other asset types
Is your securities portfolio priced at a gain or loss compared to par?
What’s your portfolio yield, and how does it compare to your cost of funds
How does your deposit mix compare to peers — heavier in core deposits or CDs?

Further Discussion Questions

If deposits fell 5% next quarter, where would you get replacement funding?
If asset liquidity is low, is it a conscious choice to deploy assets for earnings, or a funding constraint?
If non-core funding is high, is it strategic or a temporary stopgap?
How quickly could you sell enough securities to meet a 10% outflow — and at what loss?
If your L/D is low, is it under-utilization of deposits or a deliberate liquidity buffer?
If your L/D is high, does your liquidity plan address stressed funding markets?
Are you in a market where deposit competition is driving funding costs up faster than asset yields?
If you needed to raise cash, which securities would you sell first — and at what loss?
Is your securities portfolio positioned more for yield or for immediate liquidity?
Are unrealized losses preventing you from using securities for liquidity
Does your deposit base give you room to maneuver, or will you have to pay up quickly to keep balances
Do you have a large share of CDs maturing soon, and how will you replace them?
If rates fall further and deposit costs stick, how will that impact liquidity and margin?

Risk: Rate Sensitivity | Earnings Exposure to Interest Rate Changes

Rate sensitivity measures how changes in interest rates affect your bank’s net interest margin (NIM). With the data you have, you can assess this primarily from the timing of your assets (short, medium, or long maturity/repricing), your percentage of non-maturity deposits (NMDs), and the recent changes in asset yields and funding costs. Use these questions to identify whether your bank is positioned to benefit from, or be hurt by, further rate changes — and whether that positioning is intentional or the result of market conditions.

Direct Measurement Questions

Are most of your assets maturing/repricing in the short, medium, or long term?
Does your asset timing match your peers’ profile, or is it different
What percentage of your deposits are non-maturity deposits (NMDs), and how does that compare to peers?
Over the last year, did your asset yield rise or fall — and by how much?
Over the last year, did your cost of funds rise or fall — and by how much?
Has the change in yield been larger or smaller than the change in cost?
Compared to the bank you’re paired with, are your asset yields moving faster, slower, or about the same?

Further Discussion Questions

If your assets are mostly short-term, how will your margin respond in a falling rate environment?
If your assets are mostly long-term, how will your margin respond in a rising rate environment?
Have your funding costs come down as fast as asset yields in the recent rate declines?
If deposit pricing is at a floor, what does that mean for your sensitivity if rates keep falling?
Do your NMDs behave like stable core deposits, or do they reprice aggressively when rates change?
If your asset yields are falling faster than your funding costs, how do you protect margin?
Does your asset mix (fixed vs. floating) align with your interest rate outlook for the next 12–24 months?
How might you adjust asset duration if you expect another significant rate cut?
Is your current asset timing intentional for margin strategy, or a byproduct of market conditions?
In the past year, has your margin moved the way you expected based on your sensitivity profile?

Capital | Financial Strength and Capacity for Growth

Capital is the foundation of your bank’s safety and strategic flexibility. Strong capital levels protect against unexpected losses, support regulatory compliance, and create capacity for growth. In this exercise, you’ll focus on Equity-to-Assets and Total Risk-Based Capital (RBC) to evaluate your current strength and determine whether your capital position is conservative, aggressive, or well-balanced for your goals.

Direct Measurement Questions

How does your Equity-to-Assets ratio compare to peers — higher, lower, or about the same?
How does your Total Risk-Based Capital ratio compare to peers?
Is your Equity-to-Assets ratio close to, or far above, the peer you’re comparing to?

Further Discussion Questions

If you grew loans by 10% next year, how would that affect your capital ratios
Are you holding more capital than peers — and if so, is it for safety, growth readiness, or regulatory reasons?
Do your ratios leave you room to grow without needing to raise capital?
If your capital is lower than peers, is it due to aggressive growth, recent losses, or a different leverage strategy
How do your earnings retention and dividend payout affect your ability to build capital
Is your capital level typical for your asset size?
If you faced a large unexpected loss, how much would it cut into your capital ratios?
Would your capital plan allow you to weather both credit losses and margin compression at the same time?
If capital is strong but returns are weak, how could you better deploy it to create value?

Growth | Expanding the Balance Sheet Responsibly

Growth can drive earnings and market share, but it also consumes capital and liquidity and can put pressure on asset quality. Sustainable growth requires balance between loans and deposits, and alignment with your bank’s strategic objectives. In this exercise, focus on Loan Growth and Deposit Growth to assess whether your bank’s expansion pace is competitive, sustainable, and in line with your resources.

Direct Measurement Questions

Is your loan growth rate positive or negative compared to last year?
How does your loan growth compare to peers — faster, slower, or similar
Is your deposit growth positive or negative?
How does your deposit growth compare to peers?
Are your loan and deposit growth rates balanced, or is one significantly outpacing the other?
Is your growth rate higher or lower than the peer bank you’re comparing to?
Have both loans and deposits grown in the same direction (both up or both down) over the past year?

Further Discussion Questions

If loan growth is strong, is it driven by demand, pricing strategy, or relaxed credit standards?
If deposit growth is strong, is it coming from core relationships or higher-rate promotional accounts?
Has growth in one area (loans or deposits) put pressure on capital or liquidity?
If deposit growth is negative, how is the bank funding loan growth?
Has your bank entered new markets or segments to drive growth?
Is growth sustainable in your current funding and capital environment?
Are you growing faster or slower than your strategic plan?
If your growth rate is below peers, is that intentional (risk management) or a missed opportunity
If growth is high, how is the bank ensuring asset quality remains strong?
What would be the tradeoffs if you chose to accelerate or slow growth next year?

Page updated

Report abuse

Think Like Senior Bank Management

Bank Performance Questions

Profile | Big-Picture Bank Characteristics

Direct Measurement Questions

Further Discussion Questions

Return | Earnings Power and Profitability Drivers

Direct Measurement Questions

Further Discussion Questions

Risk: Asset Quality | Credit Risk and Loan Portfolio Health

Direct Measurement Questions

Further Discussion Questions

Risk: Liquidity | Funding Stability and Access to Cash

Direct Measurement Questions

Further Discussion Questions

Risk: Rate Sensitivity | Earnings Exposure to Interest Rate Changes

Direct Measurement Questions

Further Discussion Questions

Capital | Financial Strength and Capacity for Growth

Direct Measurement Questions

Further Discussion Questions

Growth | Expanding the Balance Sheet Responsibly

Direct Measurement Questions

Further Discussion Questions

2500 Wallington Way #101Marriottsville, MD 21104410-290-6999 | info@olsonresearch.com

2500 Wallington Way #101
Marriottsville, MD 21104
410-290-6999 | info@olsonresearch.com