Now, had I known you use to audit banks, I would have cajoled you to do a write-up. May be, you can help a bit with understanding some of the other efficiency metrics reported by INBK.
Anirban,
I am happy to do so.
Reserves/NPLs
Represents the percentage of bed debt reserves to non-performing (bad) loans. NPL are those for which the Bank is having, or expects to have, credit/collection issues. High reserves are usually better here, as 293% means the bank has already provided for (expensed) nearly 3x the problematic loans in their portfolio. This basically means they are aggressively managing their bad assets and conservatively recognizing them in their financial statements. if they work our the associated credit issues for these bad loans/credit situations without adding additional new bad loans, they could then reduce reserves which would increase income for that given period. When considered in relation to the other ratios below, that this ratio has been materially trending upward during the past several years means increasing asset quality and proactive operational and financial management. A very good sign.
Reserves/Gross Loans
Represents the percentage of bad debt reserves to Non-performing loans. Lower is better here, and the declining percentages for the best three years is a sign of increasing loan growth and asset quality. That this ratio has been materially trending downward during the past several years means increasing asset quality. A very good sign.
NCOs/Average Loans
Represents the percentage of net charge-offs to average loan balances. Lower is better here, as this means they are essentially writing off a low level of loans for which they cannot collect on. That this ratio has been materially trending downward during the past several years means increasing asset quality. A very good sign.
Hope this helps.
–Vic