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Bank Statement Analysis

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Submitted By ch86
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Orrstown Bank vs. DNB Financial Corporation
Orrstown Bank Financial Statement Analysis
In this assignment, we focus on Orrstown Financial Services vs. DNB Financial Corporations. Both institutions have similar financials and sizes of entities. The first part of the assignment is about, studying both institutions and compare them to each other. After that there will be an analysis and general study about the health of ORRF as an overall entity. All data are taken from UBPR reports, 10 k reports, Bloomberg, Yahoo, and Banks main website
Common Size Net Income Statement
This section of the analysis is about computing common size income statement for both ORRF and DNBFC. It seems that ORRF net income have decreased in value and resulted in huge loss in 2012 as (-63%) of net revenue. This dramatic change of the net income value started in 2011 due to the real estate low prices that have been an issue since the financial crisis started. This conclusion is supported by looking at the provision of loan losses that increased in 2011, showing the cause of the huge net loss.

On the other side, DNBFC provision for loan losses have increased reasonably in 2008 to become (10%). In addition, the net income increased steadily after 2008 too. It appears, so far, from the Net Income Statement that DNBFC is doing much better than ORRF.
Common Size Balance Sheet Statement
Based on the common size balance sheet statement of ORRF, we can see that the total loans used to be very high before the financial crisis. After 2009, loans decreased while short-term investments increased which is an indicator that ORRF started looking into safer short-term investments. When we looked at the retained earnings, we realized small amount in 2006, but in 2012 it became (-3%). The negativity of retained earnings implies the reason why ORRF couldn’t pay dividends to the shareholders. In addition,…...

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