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Pro Forma

In: Business and Management

Submitted By ssy1990
Words 1472
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Members: Zhishuang Liu Siyi Shang Qihui Wu Anqi Li Context

1. Assumptions 2 2. I/S Pro Forma 2 1.1 Interest Income 2 1.2 Net Interest Income Margin 2 1.3 Provision for Loan Losses 5 1.4 Net Income Margin 6 1.5 Tax Rate 6 1.6 Non-interest income and Non-interest expense 7 3. B/S Pro Forma 8 3.1 ROA and ROE 8 3.2 The Accounts change according to the Interest Income and Interest Expense 9 3.3 The Other Asset and Liability Accounts 11 3.4 Shareholders’ Equity Forecast 12 3.5 Retained earnings 13 4. Cash Flow Statement Pro Forma 15

1. Assumptions
(1) Interest Income grows at a certain rate every year.
(2) There is no issue of new shares
(3) There are tendencies of the ratios, such as net interest income margin, net income margin, return on asset, return on equity, etc., that could be used for forecasting.
(4) Simplify the accounts of Balance Sheet, Income Statement and Cash Flow Statement.

* 2. I/S Pro Forma
Interest Income

Graph 2-1 Interest Income

Graph 2-1 shows the total interest income of Orrstown from year 2006-2013. As it takes a longer time for small financial institutions to react on the financial crisis, the negative interest income of orrstown showed in year 2012 and 2013. Because there would be little chance of any big financial crisis in the following five years, it is reasonable to take outliers. Take the average of the annual growth rate of total interest income from 2006 to 2011, and use it as the annual growth rate of total interest income for the nest five years.

Net Interest Income Margin

Graph 2.2 Net Interest Income Margin

As is shown on Graph 2.2, the net interest income margin grew steadily from 2006-2013. Get the geometric average and Use the result as the predictor of net interest income margin for…...

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