Bank Fee Income
Financial Impact Analysis
- Net interest margin equivalent of approximately 13.3%
- For every $1,000,000 in volume, the bank will earn approximately $133,000 in net fee income
- Every $1,000,000 in portfolio will yield approximately $700,000 in compensating core deposits (bank manages 100% of deposits with 50% of loan)
Bank Portfolio Analysis
Total Portfolio $2,000,000
BRS Participation ($1,000,000)
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Bank Portfolio $1,000,000
Total Income (14%) $140,000
BRS Fee (5%) ($7,000)
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Net Income $133,000
Equivalent Net Interest Margin of Approximately 12%
Core Deposit Analysis
Bank manages 100% of deposits
Reserve Account $500,000
(approx. 25% of $2mil portfolio)
Borrower Operating Account $200,000
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Total Average Deposits $700,000
Compensating Core Deposits of $700,000 are
generated on bank’s $1,000,000 portfolio
Bank Survey Results
During the first quarter 2014, BRS conducted a survey of community and regional banks with established accounts receivable financing programs. Only banks with accounts receivable financing portfolios greater than $2 million outstanding were included.
The survey found that while accounts receivable financing was only about 4% of the banks’ portfolios (ranges were 2.75% to 5.25%), A/R financing generated about 45% of the total portfolio revenue (ranges were 39.5% to 52%). The asset allocation and revenue production are illustrated in the following pie charts:
This disproportionate revenue to assets ratio demonstrates the significant impact that A/R lending can contribute to bank profitability. In addition, A/R credit product represents net new loans that the banks would not otherwise be able to accommodate on a conventional line of credit.
