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This workbook models a basic P&L with 35 line-items. The many possible combinations
of aggregation and segmentation (described below) account for most of its bulk.
This financial model depicts a commercial bank with 2 lines of business: Home Lending & Business Lending
Both lines of business have the following 3 Distribution Channels, through which they make their loans:
Retail, Call Center, & Wholesale
The Home Lending business also has a 4th Distribution Channel: "Other"
Both lines of business make 3 types of loans: Conforming, Super Conforming, & FHA
In the Home Lending business, all originated loans are immediately "Held for Sale" on the secondary market
In Business Lending, a portion of its loans are retained, or "Held for Investment", in an owned portfolio
All but the last 3 tabs comprise an integrated "top down" model, accepting high-level assumptions about
Total Loan Originations, Variable Costs as % of Total Loan Originations, and Fixed Cost dollar amounts
The last 3 tabs (purple-shaded "LoanOffice", "HomeExec", & "BusExec") are independent of the others
They are self-contained "bottom-up" models, accepting base assumptions about Loan Executives and
Loan Offices to build up to a consolidated total
Tab: Contents
Inputs and Assumptions
P&L contribution of Home Lending business unit
P&L contribution of Business Lending business unit
P&L contribution of both business units
Summarize key drivers of profitability
Guide decision-making on Loan Executive hiring and Loan Office openings
Blend Input the percentages of Loan Origination volume for both Products and Distribution Channels, in each of Home Lending, Business Lending Held-for-Sale, &
FixedInputs Input the Fixed Cost assumptions for each Distribution Channel and Corporate allocations, on a semi-variable schedule according to Loan Origination volum
VariableInputs Input the Variable Cost percentages of Loan Origination volume, for each P&L line-item, by Product and Channel,
for both Home Lending & Business Lending businesses plus Held-for-Investment/Held-for-Sale mix; Also input assum
HomeLend Income Statement for the entire Home Lending business, as well as individual P&L's by Distribution Channel and by Product
BusLend Income Statement for the entire Business Lending business broken down by Held-for-Sale & Held-for-Investment, as well as individual P&L's by Distribution
RollupP&L Stacked Income Statement build for Home Lending, Business Lending Held-for-Sale, Business Lending Held-for-Investment, and Consolidated.
KeyMetrics Loan Origination, Variable & Fixed Cost, and Productivity metrics, and other Key Metrics, by Business, Held-for-Sale/Held-for-Investment, Channel, and Prod
Breakeven Breakeven Analysis providing Loan count and Loan Origination volume required, according to the prevailing Fixed Cost structure, to achieve an EBIT of $0.00
Loan Office "Bottom-up" P&L construction tool, using typical small, medium, and large Loan Office-level metrics to build a Consolidated-level Income Statement for the
HomeExec Evaluation tool using normalized P&L inputs to compare Loan Executive performance to Home Lending business norms, according to Loan Office size (small,
BusExec Evaluation tool using normalized P&L inputs to compare Loan Executive performance to Business Lending business norms, according to Loan Office size (sm
nding Held-for-Sale, & Business Lending Held-for-Investment businesses.
an Origination volume.
mix; Also input assumptions to calculate Interest Income, for each Jumbo ARM product.
P&L's by Distribution Channel and by Product for both Held-for-Sale & Held-for-Investment.
idated.
nt, Channel, and Product.
hieve an EBIT of $0.00
me Statement for the Home Lending business.
oan Office size (small, medium, or large)
o Loan Office size (small, medium, or large)
Note:
You may change input values on this tab
The other tabs are locked for viewing only
Note: Adjust only cells with format like this: x% All other cells update automatically.
Distribution Channel & Loan Type, Home Lending Distribution Channel & L
pdate automatically.
Held-for-Investment
Retail
Loan Executive fully loaded salary
Support staff fully loaded salary $6,000
Other direct costs per Loan Office
Other indirect costs per Loan Office $25,000
Number of Loan Executive per Loan Office 10
Number of support staff per Loan Office 5
Call Center
Sales Associate loaded salary $10,000
Support staff fully loaded salary $6,000
Wholesale
Sales Associate loaded salary $10,000
Support staff fully loaded salary $6,000
Other
Sales Associate loaded salary $10,000
Support staff fully loaded salary $6,000
$0 $0 $0 $0 $0
Conforming
TOTAL
P&L Retail Call Center Wholesale Other
Gross Volume $200,000,000
Origination Volume $200,000,000 $77,000,000 $7,000,000 $28,000,000 $28,000,000
Average loan size $357,500 $400,000 $350,000 $500,000 $100,000
% Held-for-Inv.
Size of Exist. Portf.
Gain on Sale % 2.80% 2.50% 2.50% 2.50% 2.50%
Fee/Other Income
Orig'n Fees & Pts% 0.21% 0.21% 0.21% 0.21% 0.21%
Sv'cing Income % 0.04% 0.04% 0.04% 0.04% 0.04%
Interest Income % 0.06% 0.06% 0.06% 0.06% 0.06%
Interest Margin
Net Spread
Add'l Cost of Funds
Def'd Fees/Costs
Deferred Income%
Deferred Cost %
Variable Costs
Loan-related % 0.06% 0.06% 0.06% 0.06% 0.06%
Leads % 0.03% 0.03% 0.03% 0.03% 0.03%
Commission % 2.66% 2.66% 2.66% 2.66% 2.66%
Loan Loss Reserve % 0.175% 0.175% 0.175% 0.175% 0.175%
Home Lending
LOAN TYPE
Super Conforming FHA
Retail Call Center Wholesale Other Retail Call Center Wholesale Other
3.68%
0.00%
0.70%
0.08%
Held-for-Sale Held-for-Inve
er Conforming FHA Conforming Super Conform
Wholesale Retail Call Center Wholesale Retail Call Center Wholesale Retail
$53,184 $148,914
$10,647 $29,812
$15,526 $43,472
$79,356 $222,198
ROLLUP Total
Gross Volume $350,000,000 $353,500,000 $357,035,000
% Held-for-Inv. 14% 14% 14%
Average loan size $283,571 $283,571 $283,571
Origination Volume $350,000,000 $353,500,000 $357,035,000
Gain on Sale Income $3,509,862 $3,544,961 $3,580,411
Fee/Other Income
Orig'n Fees & Points $636,840 $643,208 $649,640
Servicing Income $133,409 $134,743 $136,091
Interest Income $189,478 $191,373 $193,287
Total Fee/Other Income $959,727 $969,325 $979,018
Interest Margin
Interest Income $9,204,190 $9,296,232 $9,389,195
Net Interest Exp. $0 $0 $0
Net Interest Margin $9,204,190 $9,296,232 $9,389,195
Def'd Fees/Costs
Deferred Income $349,997 $353,496 $357,031
Deferred Costs $40,000 $40,400 $40,804
Net Def'd Fees/Costs $309,997 $313,097 $316,228
DISTRIBUTION CHANNEL
Fixed Costs TOTAL Retail Call Center Wholesale
Direct $90,000 $60,000 $10,000 $10,000
Indirect $56,000 $50,000 $2,000 $2,000
Corporate Alloc. $0 $0 $0 $0
Total $146,000 $110,000 $12,000 $12,000
Productivity
Loans 559 275 29 80
Loan Offices 2 2 n/a n/a
Volume/Loan Office $100,000,000 $55,000,000 n/a n/a
Loans/Loan Office 280 138 n/a n/a
Loan Executives 23 20 1 1
Loan Exec. Salary $4,500 $0 $10,000 $10,000
Volume/Loan Exec. $200,000,000 $110,000,000 $10,000,000 $40,000,000
Loans/Loan Exec. 24 $14 $29 $80
Loan Exec./Loan Office 12 10 n/a n/a
Supporting FTEs 16 10 2 2
Average FTE Salary $6,000 $6,000 $6,000 $6,000
FTE/Loan Office 8 5 n/a n/a
FTE/Loan Exec. 1 1 2 2
DISTRIBUTI
BUSINESS LENDING TOTAL Retail
Key Metrics Held-for-Sale Held-for-Inv. Held-for-Sale Held-for-Inv.
Volume
Loan Count 541 270 83 42
Origination Volume $100,000,500 $49,999,500 $25,000,125 $12,499,875
Average Loan Size $185,000 $185,000 $300,000 $300,000
Costs
Variable Cost % 1.482% 1.543% 3.937% 3.998%
Fixed Cost % 0.079% 0.158% 0.220% 0.440%
Direct 0.050% 0.100% 0.120% 0.240%
Indirect 0.029% 0.058% 0.100% 0.200%
Corp. Allocation 0.000% 0.000% 0.000% 0.000%
Key Measurements
Fee/Other Income % 0.32% 19.11% 0.33% 19.11%
Net Cost to Originate $1,320,287 $471,470 $961,143 $442,239
Net Cost to Originate/Loan $2,443 $1,744 $11,534 $10,614
Personnel Expenses $1,395,007 $697,493 $962,505 $481,245
Personnel Expenses/Loan $2,581 $2,581 $11,550 $11,550
Gain on Sale % 2.88% 2.88%
Net Interest Margin % 18.41% 18.41%
Production Expense $1,560,659 $850,466 $1,039,168 $554,739
Avg Production Profit % 0.38% 0.38% 0.38% 0.38%
Avg Production Profit $380,002 $189,998 $95,000 $47,500
DISTRIBUTI
TOTAL Retail
Fixed Costs Held-for-Sale Held-for-Inv. Held-for-Sale Held-for-Inv.
Direct $50,000 $50,000 $30,000 $30,000
Indirect $29,000 $29,000 $25,000 $25,000
Corporate Alloc. $0 $0 $0 $0
Total $79,000 $79,000 $55,000 $55,000
Productivity
Loans 541 270 83 42
Loan Offices 2 1 1 1
Volume/Loan Office $50,000,250 $49,999,500 $25,000,125 $12,499,875
Loans/Loan Office 270 270 83 42
Loan Executives 23 14 10 10
Loan Exec. Salary $7,500 $7,500 $0 $0
Volume/Loan Exec. $4,347,848 $3,571,393 $2,500,013 $1,249,988
Loans/Loan Exec. 24 $19 $8 $4
Loan Exec./Loan Office 12 14 10 10
Supporting FTEs 16 13 5 5
Average FTE Salary $6,000 $6,000 $6,000 $6,000
FTE/Loan Office 8 13 5 5
FTE/Loan Exec. 1 1 1 1
ANNEL LOAN TYPE
Other Conforming Super Conf'g FHA
LOAN TYPE
ANNEL Conforming Super Conforming
Other Retail Call Center Wholesale Other Retail
$10,000 $42,000 $7,000 $7,000 $7,000 $12,000
$2,000 $35,000 $1,400 $1,400 $1,400 $10,000
$0
$12,000 $77,000 $8,400 $8,400 $8,400 $22,000
50 25 467 233 27 14
$5,000,025 $2,499,975 $70,000,350 $34,999,650 $5,000,025 $2,499,975
$100,000 $100,000 $150,000 $150,000 $185,000 $185,000
DISTRIBUTION CHANNEL
Call Center Wholesale Conforming
Held-for-Sale Held-for-Inv. Held-for-Sale Held-for-Inv. Retail Call Center
$10,000 $10,000 $10,000 $10,000 $1,500 $500
$2,000 $2,000 $2,000 $2,000 $1,250 $100
$0 $0 $0 $0
$12,000 $12,000 $12,000 $12,000 $2,750 $600
50 25 467 233 4 3
n/a n/a n/a n/a 0 n/a
n/a n/a n/a n/a $25,000,125 n/a
n/a n/a n/a n/a 83 n/a
1 1 1 1 1 0
$10,000 $10,000 $10,000 $10,000 $0 $10,000
$5,000,025 $2,499,975 $70,000,350 $34,999,650 $2,500,013 $5,000,025
$50 $25 $467 $233 $8 $50
n/a n/a n/a n/a 10 n/a
2 2 2 2 0 0
$6,000 $6,000 $6,000 $6,000 $6,000 $6,000
n/a n/a n/a n/a 5 n/a
2 2 2 2 1 2
LOAN TYPE
Super Conforming FHA
Call Center Wholesale Other Retail Call Center Wholesale Other
$2,000 $2,000 $2,000 $6,000 $1,000 $1,000 $1,000
$400 $400 $400 $5,000 $200 $200 $200
6 16 80 28 3 8 40
n/a n/a n/a 0 n/a n/a n/a
n/a n/a n/a $55,000,000 n/a n/a n/a
n/a n/a n/a 138 n/a n/a n/a
0 0 0 2 0 0 0
$10,000 $10,000 $10,000 $0 $10,000 $10,000 $10,000
$2,000,000 $8,000,000 $8,000,000 $11,000,000 $1,000,000 $4,000,000 $4,000,000
$29 $80 $400 $14 $29 $80 $400
n/a n/a n/a 10 n/a n/a n/a
0 0 0 1 0 0 0
$6,000 $6,000 $6,000 $6,000 $6,000 $6,000 $6,000
n/a n/a n/a 5 n/a n/a n/a
2 2 2 1 2 2 2
LOAN TYPE
Super Conforming FHA
Held-for-Sale Held-for-Inv. Held-for-Sale Held-for-Inv.
0.32% $0 0.32% $0
$329,731 $205,367 $923,247 $575,026
$2,440 $3,039 $2,440 $3,039
$348,752 $174,373 $976,505 $488,245
$2,581 $2,581 $2,581 $2,581
4.00% 2.50%
18.41% 18.41%
$390,165 $212,617 $1,092,462 $595,326
0.38% 0.38% 0.38% 0.38%
$95,000 $47,500 $266,001 $132,999
LOAN TYPE
Held-for-Sale
onforming Super Conforming FHA
Wholes. Retail Call Center Wholes. Retail Call Center Wholes.
$500 $7,500 $2,500 $2,500 $21,000 $7,000 $7,000
$100 $6,250 $500 $500 $17,500 $1,400 $1,400
23 21 13 117 58 35 327
n/a 0 n/a n/a 1 n/a n/a
n/a $25,000,125 n/a n/a $25,000,125 n/a n/a
n/a 83 n/a n/a 83 n/a n/a
0 3 0 0 7 1 1
$10,000 $0 $10,000 $10,000 $0 $10,000 $10,000
$70,000,350 $2,500,013 $5,000,025 $70,000,350 $2,500,013 $5,000,025 $70,000,350
$467 $8 $50 $467 $8 $50 $467
n/a 10 n/a n/a 10 n/a n/a
0 1 1 1 4 1 1
$6,000 $6,000 $6,000 $6,000 $6,000 $6,000 $6,000
n/a 5 n/a n/a 5 n/a n/a
2 1 2 2 1 2 2
LOAN TYPE
Held-for-Inv.
Conforming Super Conforming FHA
Retail Call Center Wholes. Retail Call Center Wholes. Retail
$1,500 $500 $500 $7,500 $2,500 $2,500 $21,000
$1,250 $100 $100 $6,250 $500 $500 $17,500
2 1 12 10 6 58 29
0 n/a n/a 0 n/a n/a 1
$12,499,875 n/a n/a $12,499,875 n/a n/a $12,499,875
42 n/a n/a 42 n/a n/a 42
1 0 0 3 0 0 7
$0 $10,000 $10,000 $0 $10,000 $10,000 $0
$1,249,988 $2,499,975 $34,999,650 $1,249,988 $2,499,975 $34,999,650 $1,249,988
$4 $25 $233 $4 $25 $233 $4
10 n/a n/a 10 n/a n/a 10
0 0 0 1 1 1 4
$6,000 $6,000 $6,000 $6,000 $6,000 $6,000 $6,000
5 n/a n/a 5 n/a n/a 5
1 2 2 1 2 2 1
FHA
Call Center Wholes.
$7,000 $7,000
$1,400 $1,400
$8,400 $8,400
17 163
n/a n/a
n/a n/a
n/a n/a
1 1
$10,000 $10,000
$2,499,975 $34,999,650
$25 $233
n/a n/a
1 1
$6,000 $6,000
n/a n/a
2 2
Breakeven Analysis
Definitions:
Breakeven Quantity = Number of Loans Originated
Breakeven Revenue = Gain on Sale + Fee/Other Income (Held-for-Sale)
= Net Interest + Net Def'd Fees/Costs (Held-for-Inv.)
Breakeven Volume = Origination Volume
DISTRIBUTION CHANNEL
Business Lending Retail Call Center
Held-for-Sale Held-for-Inv. Held-for-Sale Held-for-Inv. Held-for-Sale
Q= 541 270 83 42 50
P= $5,920 $35,203 $9,606 $57,086 $3,201
V= $2,741 $2,854 $11,810 $11,994 $3,137
F= $79,000 $79,000 $55,000 $55,000 $12,000
B/E Quantity 25 2 n/a 1 188
Breakeven Revenue $147,123 $85,971 n/a $69,629 $601,035
Breakeven Volume $4,597,766 $451,800 n/a $365,920 $18,779,108
DISTRIBUTION CHANNEL LOAN TYPE
Call Center Wholesale Other Conforming
29 80 400 350
$10,911 $15,587 $3,117 $11,270
$9,605 $13,721 $2,744 $10,977
$12,000 $12,000 $12,000 $102,200
9 6 32 349
$100,219 $100,219 $100,219 $3,929,751
$3,214,814 $3,214,814 $3,214,814 $139,480,293
LOAN TYPE
Super Conforming FHA
Held-for-Sale Held-for-Inv. Held-for-Sale Held-for-Inv.
135 68 378 189
$7,987 $35,203 $5,212 $35,203
$2,741 $2,854 $2,741 $2,854
$19,750 $19,750 $55,300 $55,300
4 1 22 2
$30,069 $21,493 $116,639 $60,180
$696,459 $112,950 $4,139,928 $316,260
Loan Office Buildup (Home Lending)
Small Med Large
Production Mo./Mo. Growth
Loan Office count 20 40 10 Loan Volume
Loan Exec. count 4 9 15 Loan Executives
Total Loan Execs. 80 360 150 Volume per Loan Exec.
FTEs 1 3 5 Other FTE
Total FTEs 20 120 50 Base Compensation
Loans Guarantee
Volume per Loan Office $2,000,000 $5,000,000 $7,000,000 FTE Salary
Average Loan Size $225,000 $250,000 $300,000 Base Compensation
Loans per Loan Exec. 9 20 23 Commission %
Distribution 12.9% 64.5% 22.6% Total Commissions
Compensation Total Compensation
Commission % 2.66% 2.66% 2.66% Loans
Guarantee per Loan Exec. $4,500 $4,500 $4,500 Average Loan Size
Avg. FTE Salary $6,000 $6,000 $6,000 Gain on Sale %
Income Net GOS $
GOS % 2.66% 2.66% 2.66% Other Income
Other Income % 0.32% 0.32% 0.32% Variable Costs
Variable Cost % 1.40% 1.40% 1.40% Fixed Costs
Variable Cost $28,000 $70,000 $98,000 Fixed Costs, Direct
Fixed Costs per Loan Office Fixed Costs, Indirect
Direct (excluding Comp.) $24,469 $63,129 $84,692 Fixed Costs, Allocated
Indirect $24,469 $63,129 $84,692 Total Fixed
Corporate Allococation Total Costs
EBIT
Notes:
1. Only orange-shaded cells may be changed. Numerous formulas use array calculations that will fail if modified.
2. Use the following guidelines for Loan Executive count per Loan Office:
fail if modified.
Month 8 Month 9 Month 10 Month 11 Month 12 YEAR 1