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Non-Tech : NetBank(NTBK)-formerly Atlanta Internet Bank -- Ignore unavailable to you. Want to Upgrade?

To: jjs_ynot who wrote (529)5/27/1998 10:07:00 AM
From: Les White  Read Replies (2) | Respond to of 2414
 
>>any new deposits will be accretive to the bottom line<<

Dave, you've got the right idea but the wrong terminology. I think you mean to point out that new revenues will be accretive. Deposits cost money because the bank is paying interest to the customer therefor it is an expense.

It is the loans or assets that provide the income which generate the revenues that drop to the bottom line. A 30% increase in deposits does not necessarily generate a 30% increase in revenues unless they are put into corresponding loans.

It's the asset/revenue side of the equation that the author was calling into question. If AIB is successful in originating their own loans then their earnings per loan should actually increase.

Technically speaking,

Les



To: jjs_ynot who wrote (529)5/27/1998 10:47:00 AM
From: Jgilbert  Read Replies (1) | Respond to of 2414
 
No, Dave, no. You don't make money holding someone else's cash deposits. You make money by lending money. Increased deposits do not accrete to the bottom line; deposits are liabilities for a bank; it's loans that are assets.

Neat little bank we have here, eh?


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