Doing a Return-on-Investment Analysis

By Coffey, John J.; Palm, Gene | ABA Bank Marketing, November 2005 | Go to article overview

Doing a Return-on-Investment Analysis


Coffey, John J., Palm, Gene, ABA Bank Marketing


One of the "details" to which you should pay attention is how the bank makes money--or, more specifically, how it calculates how it makes money. If your finance department has developed a profitability model, it is very likely that it has mapped the bank's general hedger (or G/L) data into its model. Among other things, this report contains a detailed listing of all of the bank's noninterest expenses and all the sources of noninterest income.

Your bank can map its G/L data in a variety of ways to help it more accurately calculate noninterest expenses and noninterest income at the account level. Because this process is subjective, it is as much an art as it is a science.

For instance, you'll find that only a few noninterest expense G/Ls are related to specific products--one example might be if your bank logged a specific expense for the cost of booking a not-sufficient-funds (NSF) fee every time a customer overdrafts his or her checking account, like a commission paid to a third-party vendor. If this were the case, then the expense could be mapped to the same checking products (which gave rise to the NSF income) so that they could absorb a portion of the NSF expenses.

For other noninterest expense G/Ls, you might find that they are more closely related to processes than they are to specific products. For example, the cost of postage could be related to statement rendering, CD renewal notices, loan late payment notifications or even marketing initiatives. As such, these may require you to collect baseline data, to determine "rules" that would assign every account in the bank a portion of these costs. Sometimes these rules are expressed as weight factors or percentages. …

The rest of this article is only available to active members of Questia

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Buy instant access to cite pages or passages in MLA 8, MLA 7, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

(Einhorn 25)

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Note: primary sources have slightly different requirements for citation. Please see these guidelines for more information.

Cited article

Doing a Return-on-Investment Analysis
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Help
Full screen
Items saved from this article
  • Highlights & Notes
  • Citations
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

matching results for page

    Questia reader help

    How to highlight and cite specific passages

    1. Click or tap the first word you want to select.
    2. Click or tap the last word you want to select, and you’ll see everything in between get selected.
    3. You’ll then get a menu of options like creating a highlight or a citation from that passage of text.

    OK, got it!

    Cited passage

    Style
    Citations are available only to our active members.
    Buy instant access to cite pages or passages in MLA 8, MLA 7, APA and Chicago citation styles.

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

    1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

    Cited passage

    Thanks for trying Questia!

    Please continue trying out our research tools, but please note, full functionality is available only to our active members.

    Your work will be lost once you leave this Web page.

    Buy instant access to save your work.

    Already a member? Log in now.

    Search by... Author
    Show... All Results Primary Sources Peer-reviewed

    Oops!

    An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.