The best way to understand bank financial statements is to review them at a slow pace. It is akin to other financial statements; it reveals the bank’s financial health in a nutshell.
The Three Basic Bank Financial Statements
- income statement
- balance sheet
- cash flow
The balance sheet presents the total assets and liabilities, plus the bank owner’s equity. Encyclopedia Britannica defines the bank owner’s equity as: the residual interest in the assets of an entity after deducting liabilities.
The cash flow statement presents a picture of the cash flow operations. It summarizes operation activity. It follows the cash in-flow and out-flows. There is also a bank’s statement of owner’s equity. It records previous equity, adjust it to investments, withdrawals, and income resulting in the final equity.