Financial Resilience

We believe that a bank should seek stability over volatility, be safe and sound, and provide fair returns to investors after ensuring fair pricing to customers, fair wages to employees, and socially and environmentally responsible procurement and practices. We seek to optimize for mission rather than maximize for profit.

Click through our sustainable financials to learn what they meanhow we’re doing, and how they reflect our mission.

Key Financials

Total Assets

Total Assets ($ Millions)

How Big is Our Bank?

What This Means

This is the most common way to describe how big a bank is. Our assets are primarily comprised of the loans to small businesses, nonprofits, commercial real estate and consumers discussed on prior pages. The bank’s balance sheet also includes cash, securities, and real estate.

Why This is Important

Larger asset sizes can bring scale efficiencies, making provision of products and services less expensive per customer. At Beneficial State, loans are one of the primary ways we create social impact. As we get larger and make more mission loans, we create a more positive social impact.

Mission Relevance

Very large banks have a harder time really knowing their customers and providing appropriate oversight and control. The biggest banks in the U.S. also have a large influence over the financial system, leaving our economy vulnerable to the actions of a few banks.

Net Loan Growth

Net Loan Growth

How Rapidly Our Loan Portfolio is Growing

What This Means

The percent of new loan growth from the previous year (dollar value of loans booked during the year), including new loans made, loans purchased, or loans added to the portfolio through a merger or acquisition minus any loans that have been paid down, paid off, sold or gone bad.

Why This is Important

When compared to peers, loan growth can be an indicator of acceptance in the market. Doing better than the market can suggest that more borrowers are interested in the bank, possibly due to better service, terms or mission.

Mission Relevance

Loan growth in and of itself does not correlate with mission metrics. However, we have internal goals for the percentage of mission-aligned loan originations that we track. As a part of the credit risk process, the Bank monitors the overall portfolio and individual loans by loan type (credit) and geographic concentrations, along with a number of other factors, to ensure appropriate growth.

Income

Income (Adjusted, Pre-Tax)

Revenue Minus Expenses

What This Means

Total revenue from loans, fees, and other sources, minus expenses (not including taxes). Primarily reflects income from operations.

Why This is Important

Income reveals whether the bank is sustainably covering operating expenses.

Mission Relevance

We don’t maximize our income to provide large profits to individual private shareholders. We use our income to either grow the bank and expand our mission, or to support our nonprofit owners, who, in turn support our communities.

Return on Equity (ROE)

Return on Equity (ROE)

Profit Generated on Investors’ Funds

What This Means

ROE reflects profits generated on investors’ funds (equity). The gray line shows ROE excluding extraordinary income and expenses. The orange line shows ROE as reported without adjustment.

Why This is Important

People who invest in banks are generally expecting to maximize economic growth and return for their investment; ROE reveals their annual return. Every bank has both recurring core earnings as well as non-recurring income and expenses that need to be analyzed to get the true picture of a bank’s profits from year to year.

Mission Relevance

Having a target cap on returns is almost unheard of because banks usually try to maximize returns for investors and attract more of them. Our target helps to ensure our safety, soundness and resilience, and our ability to fund growth. It ensures that the bank can optimize for social, environmental, and financial outcomes, not solely maximize financial returns and externalize costs. Our nonprofit ownership and B Corp alignment allow us to set these targets.

Return on Assets (ROA)

Return on Assets (ROA)

Profitability Relative to Total Amount of Money We Manage

What This Means

This reflects how efficiently a bank generates profit from its assets. The gray line shows ROA excluding extraordinary income and expenses. The orange line shows ROA as reported without adjustment.

Why This is Important

A positive return is essential to support loan and deposit growth from operations. ROA does not capture the level of risk taken on those assets, so changes in the asset mix in the short run or changes in the amount of fee revenue may also cause changes in this ratio.

Mission Relevance

Achievement of a return in this range ensures our safety, soundness and resilience, and our ability to fund the ongoing pursuit of our mission. As with ROE, a target range ensures that the bank can optimize for social and environmental outcomes rather than maximize returns.

Equity to Total Assets

Equity to Total Assets

Bank Strength and Resilience

What This Means

This displays how much of the bank’s total assets are provided by owners/investors (equity) vs. its other primary funding (deposits). The equity is kept in case of an emergency, to cover losses and unexpected events, keeping depositor dollars safe. Banks need to operate in a safe and sound manner, avoid excessive risk, and maintain strong equity levels.

Why This is Important

Shows how strong and resilient the bank is. Higher equity numbers mean more ability to cover unexpected losses.

Mission Relevance

Values-based bank investors should provide their equity dollars with an expectation of social and environmental returns, and modest, not extractive financial returns. Resilience provides investors with confidence that returns can be consistently maintained.

Net Interest Margin (NIM)

Net Interest Margin (NIM)

How We Deploy Our Deposits for Lending Activities

What This Means

Net Interest Margin mainly shows the differential between the rates paid to customers for deposits and what is made from borrowers for loans and on other interest earning assets.

Why This is Important

Net interest margin is generally the largest source of revenue and is used to cover operating costs and credit losses.

Mission Relevance

We strive to provide equitable interest rates to both depositors and borrowers that also allows us to maintain a sustainable return on capital in order to fulfill our mission. Beginning in mid-2016, our NIM increased due to acquiring a much higher yielding sub-prime auto lending portfolio through a merger. The yields were a reflection of the estimated increased credit risk (along with related, offsetting, loan reserve costs) for this portfolio. As the portfolio matured and the underwriting processes, analysis and controls developed, we repositioned the portfolio so that we were able to better serve pre-prime customers by offering them lower loan rates and terms that set them up for success. Our goal has been and continues to be to serve underserved markets, including sub-prime consumer borrowers in our footprint, in a sustainable way.

Texas Ratio

Texas Ratio

How Many of Our Borrowers Are Having Trouble Paying Us Back?

What This Means

Texas Ratio helps to explain what portion of a bank’s assets are not performing as expected, generally loans to borrowers that are struggling to repay their debt, plus foreclosed assets. This number illustrates what percentage of a bank’s assets are in this category, with bad assets over capital. A lower Texas ratio is better.

Why This is Important

Numbers higher than the market generally mean that a bank is at a higher risk of losing money. The average Texas Ratio of banks that failed in the most recent crisis (2005-2011) was 134%.

Mission Relevance

Mission-driven banks have strong customer relationships and a deep understanding of their activities and the sectors they work in. This can help identify issues early and makes working through challenges with clients easier when problems do occur. Even kind-hearted lenders need their loans repaid.

Real Economy Revenues

Real Economy Revenues

Are We Mainly Funding New Real Activities versus Buying and Selling Money?

What This Means

GABV uses the term “Real Economy” to differentiate from the “financial economy”. A loan made to a person or an entity that provides products or services in the community is called a real economy transaction. When a bank purchases or sells loans or securities on the secondary market, that is considered a financial economy transaction – it is the purchase of money.

Why This is Important

Values-based banks are strongly and directly connected to financing the real economy because that’s where they can have a positive impact on people’s lives and safeguard the environment. As such, Beneficial State does not engage in speculation, investment banking, trading or trying to extract synthetic value from the economy.

Mission Relevance

Real economy assets in a values-based bank should be relatively high. Financial economy assets should be relatively low because their impact on people’s lives is, at best, indirect. This does not mean that no financial economy transactions are mission-aligned. With indirect lending, we support other mission-aligned and specialty lenders that share our values and contribute to the greater good. For example, a nonprofit lender may have expertise in making particular kinds of mission-impactful loans, like residential solar financing. In order for that nonprofit to have more money on hand to make more of these loans, we may purchase some of their loans. That’s a financial economy transaction because we’re purchasing loans. However, it’s a mission-aligned activity because we are not only helping that nonprofit make more mission loans, but the loans we purchased are intrinsically mission-aligned.