Merchants Bank Case

The bank's return on equity is also high and has steadily increased from six percent five years ago to eight percent last year and 11 percent in the most recent year. This indicates that the bank is able to use its equity financing well, although the increase in this measure of profitability could indicate that the bank is relying too heavily on debt financing and may be increasing its risk level to an unacceptable level.

The upward trend in the bank's ROE measure but the steady pace of the ROA suggests that the bank should take steps toward reducing its leveraged position. This will increase the bank's return on assets while maintaining a strong return on equity, but will reduce the level of risk in which the bank engages and improve its long-term competitive position. Such a move may well improve the bank's ability to continue to serve the community and its various stakeholders well.

2. Merchants National Bank is on a comparable level in terms of the competition within the state. The bank has had the same steady performance with regard

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Approximate Word count = 1139
Approximate Pages = 5 (250 words per page)

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