Bank data & compliance
Bank Statement Analysis: Definition & Example
What Is Bank Statement Analysis?
Bank statement analysis is reviewing a person’s or business’s bank transactions to estimate income, spot recurring expenses, check balances, and flag risks such as overdrafts or unusual deposits.
What does bank statement analysis mean?
Analysts, underwriters, and landlords review bank statements to see real money movement: what deposits come in, from whom, and how often; what goes out; how balances trend; and whether the account overdraws.
Manual analysis means reading PDF statements line by line. Automated analysis uses transaction data, either extracted from statements or pulled directly from the bank with permission, and categorizes it to calculate things like average monthly income, recurring deposits, and NSF counts.
Statement PDFs can be edited, so many reviewers prefer data pulled directly from the bank. Bank data also shows net deposits, not gross pay, and only covers the accounts the person chooses to share.
Bank statement analysis example
A lender analyzing 12 months of a contractor’s business account finds average monthly deposits of $22,000, of which $2,500 are transfers from his personal account. Excluding transfers, business revenue averages $19,500 per month, with no NSF events and an average daily balance of $8,200.
Related terms
- Transaction CategorizationTransaction categorization is labeling each bank or card transaction by type, such as payroll, rent, groceries, transfer, or loan payment, so the data can be summarized and analyzed.
- Recurring DepositsRecurring deposits are payments that land in a bank account on a regular, repeating pattern, such as a paycheck every two weeks or a monthly benefit, and are commonly treated as signs of ongoing income.
- Non-Recurring DepositsNon-recurring deposits are one-time or irregular deposits, such as tax refunds, transfers between accounts, loan proceeds, or gifts, that are usually excluded from ongoing income estimates.
- Cash-Flow UnderwritingCash-flow underwriting is evaluating an applicant using income, spending, and balance patterns from their bank account data, often alongside or instead of a traditional credit report.
- Document TamperingDocument tampering is altering a genuine document, such as a pay stub, bank statement, or ID, to change key details like income, balances, names, or dates.
