Understanding Banks' Earnings
	Exhibit 7: $ Effect on EPS of a 1% Improvement in the Value of a Critical Ratio
	RATIO	$ EFFECT OF 1%	RANK	ORIGINAL	IMPROVEMENT	IMPROVED
		IMPROVEMENT		VALUE	FACTOR	VALUE
	INCOME STATEMENT
	ADJUSTMENTS
				Interest Rate	Do not adjust interest rate directly;	Interest Rate
				3.973%	instead, adjust $ interest expense.	3.933%
	Average Interest Rate			Interest Expense		Interest Expense
	on Average Liabilities	$0.04959	3	$2,448	x  .99  =	$2,424
	Loan Loss Provision
	to Loans	$0.00633	9	5.464%	x  .99  =	5.409%
	Interest Revenue
	to Total Revenue	$0.00206	11	75.403%	[(75.403%  x  1.01) -.01]  =	75.157%
	Efficiency
	Ratio	$0.06886	2	66.204%	x  .99  =	65.542%
	Tax Rate	$0.01407	8	32.809%	x  .99  =	32.480%
				Asset Turnover		Asset Turnover
	Asset Turnover			11.444%	x  1.01 =	11.559%
	(With Original Noninterest			&		&
	Expense Unchanged)			Noninterest		Noninterest
				Revenue Consumption		Revenue Consumption
		$0.09768	1	44.829%	/ 1.01 =	44.386%
	BALANCE SHEET
	ADJUSTMENTS
				Preferred Equity Ratio	/  {  [1.01 x (1 - Prf. Eq. Ratio - Com. Eq. Ratio)]	Preferred Equity Ratio
	1% Increase in $ Liabilities			0.530%	+ Prf. Eq. Ratio + Com. Eq. Ratio  }	0.525%
	($ Equity Unchanged)			&
				Common Equity Ratio	/  {  [1.01 x (1 - Prf. Eq. Ratio - Com. Eq. Ratio)]	Equity Ratio
		$0.02563	7	6.471%	+ Prf. Eq. Ratio + Com. Eq. Ratio  }	6.411%
				Preferred Equity Ratio		Preferred Equity Ratio
				0.530%	/ [1 + (Com. Equity Ratio x .01)] =	0.529%
				&
	1% Increase in			Common Equity Ratio		Common Equity Ratio
	$ Common Equity			6.471%	x  {1.01 / [1 + (Com. Equity Ratio x .01)]}  =	6.531%
	($ Preferred Equity &			&		&
	$ Liabilities Unchanged)			Prf. Chrg. to Com. Eq.		Prf. Chrg. to Com. Eq.
				0.961%	/ 1.01 =	0.952%
				&		&
				Book Value		Book Value
		$0.00295	10	$12.92515	x  1.01 =	$13.05440
				Common Equity Ratio		Common Equity Ratio
				6.471%	x  1.01 =	6.535%
	1% Increase in			&		&
	$ Common Equity			Preferred Charge to Common Equity		Preferred Charge to Common Equity
	(Replacing an Equal			0.961%	/ 1.01 =	0.952%
	Amount of $ Liabilities)			&		&
				Book Value		Book Value
		$0.00116	12	$12.92515	x  1.01 =	$13.05440
				Preferred Equity Ratio		Preferred Equity Ratio
	1% Increase in $ Assets			0.530%	/ 1.01 =	0.525%
	($ Liabilities Increasing,			&		&
	$ Equity Unchanged)			Common Equity Ratio		Common Equity Ratio
		$0.02756	6	6.471%	/ 1.01 =	6.407%
	1% Increase in $ Assets
	(Total Equity Ratio & Prf.			Book Value		Book Value
	Chrg.as%Com.Eq.Unchanged)	$0.02758	5	$12.92515	x  1.01 =	$13.05440
	1% Reduction in # of
	Common Shares Outstanding			Book Value		Book Value
	($ Total Equity Unchanged)	$0.02786	4	$12.92515	/  .99  =	$13.05570