- Bank efficiency ratios are an effective and easy means of comparing management’s ability to control overhead.
- Efficiency ratios have spiked in 2020 due to larger loan write-offs and additions to loan loss reserves.
- According to Bank Director magazine, the secret to generating low efficiency ratios is to increase revenue faster than expenses.
- Operating leverage is important when comparing efficiency ratios.
- "It is not just how much you spend - it is how many dollars of revenue each dollar of expense creates."
For further details see:
Bank Efficiency Ratio: The Carl Perkins Of Bank Due Diligence