Using the information below, explain specifically why Heritage Bank's OROA went down in 2006, and why its OROA was lower than the PG3 in 2006. Note each item is as a % of average total assets, for instance IR% is interest revenue to average total assets, IE% is interest expense to average total assets, NIM is the net interest margin, NIR% is non-interest revenue to average total assets, NIE% is non-interest expense to average total assets, PLL% is the provision of loan losses to average total assets, and OROA is operating income to average total assets.

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The Answer is Heritage Bank (HB) OROA fell from 0.54% in 2005 to -0.25% in 2006. This was the result of a fall in HB's NIM%, a rise in its Burden%, and a large rise in its PLL%, and a small fall in its realized gain/losses on securities. The NIM fell by about 0.15%. The rise in the Burden% by 0.18% in 2006 with a large fall in the NIR% despite a small fall in the NIE%. The rise in the PLL% was 0.34% as a large contributor to the fall in the OROA in 2006.
Heritage Bank's OROA is lower than the PG3 both years. In 2006, HB's OROA is lower as the result of a much higher Burden % (lower NIR% and higher NIE%) and a higher PLL%, despite a slightly higher NIM% and slightly higher realized gain/loss on securities than its peers.

Using the Information Below, Explain Specifically Why Heritage Bank's OROA