1 / 21

Sources and Uses: Historical cont’d and Planning

Sources and Uses: Historical cont’d and Planning. Sources and Uses. Stmts End Yr. 2 Qtr. 1. Basics of Sources and Uses. U ( - ). S ( + ). A. A. L. L. Sources and Uses in more detail. Not just Net Securities, but Securities maturing, Securities Purchased and Market Value Change.

hertz
Download Presentation

Sources and Uses: Historical cont’d and Planning

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Sources and Uses:Historical cont’d and Planning

  2. Sources and Uses • Stmts End Yr. 2 Qtr. 1

  3. Basics of Sources and Uses U ( - ) S ( + ) A A L L

  4. Sources and Usesin more detail • Not just Net Securities, but Securities maturing, Securities Purchased and Market Value Change. • Not Just Loans, but each class of loan. • Not just Deposits and Savings, but each class of deposit and savings with Brokered Deposits (CDs) separate.

  5. Be Clear About What You Control • Direct Decision Control: Securities, Loans, Premises, Deposits, Dividends and Capital • Indirect Decision Control: Fed Funds • No Control: Cash, Other Assets, Accrued Taxes, Other Liabilities

  6. Initial Decision Framework • Assume some public deposit levels • Track securities for pledge requirements, taking account of current maturities • Track other deposit and loan changes • Balance with CDs & Fed Funds • Prepare decision form

  7. Decisions • Loan Rates (Industrial) • You cannot offer less than 1.5% below mkt. • Rate over mkt: P, +.2%; H, +.3%; M, +.4% • (Consumer) • You cannot offer less than 2.5% below mkt. • Rate over mkt: 3% • Credit Card Loans not a decision

  8. Decisions • Loan Rates (Real Estate) • Rate a 20 Yr. Floating Rate Decision • Ability to sell old loans; Pro-rata last 5 yrs. • Ability to sell up to 80% of new origination • In all cases, you keep servicing • Credit Policy/Letter of Credit • More Aggressive; More Loans/Fees, More Loan Losses/Non-accruals • Less Aggressive; Less of All….

  9. Decisions • Service Charges and Fees • Commercial: Per check taken in deposit and cents of svc chg credit per $100 bal kept • Retail: Per check written and cents of svc chg credit per $100 bal kept • Credit Card Processing Fee • Percent of $ CC transaction • Requires a comm’l ckg acct (so affects DDs!)

  10. Decisions • CDs $ Amt of 3mo, 6 mo and 1Yr from S/U form • Syndicated Loans Purchased • $ Amt to keep up portfolio • Futures Position (See Pg. 70-72) • Bought futures: speculative! • Sold futures = (DW value of Secs * .68) * (3/12) • Sell > 110% or Buy > 10% and Capital Requirement will change

  11. Decisions • Expenses and Allocations • MM Rate: No more than +/- 1.5% from mkt. • Branches: Close or Open • Bus Dev Budget: Advtg (More effect on Retail) • Salary: Indicator • ROE > 20%, they expect COLA + 7.5% • Loss, they’ll take keeping their jobs….. • Percentage Effort and Allocations • Read Pgs. 74-77 closely and strategize! • Dividends: Payout 25%!

  12. Decision Mechanics#1: Pledge of Securities • Assume Public and Trust Deposits Changes: • Easy Answer 1.4  2.1 will be 2.1  2.2 • Public DD (196.934 – 195.732) = +1.202 • Public TD (295.061 – 276.484) = +18.577 • Trust Reqm’t (240.451 – 229.276) = +11.175 • Public DD 198.136, TD 313.638 • Trust Reqm’t 251.626

  13. Projected Pledge(Pg. 56 & 57) • Muni’s [.25 * 1.10 * (198.136+313.638)]+ 251.626 = 392.364 Munis are 418.131 – 5.667 = 412.464 Good • Futures • (DW Value of Secs * .68 ) * 3/12 • (918.31 * .68) * 3/12 = 156.112…so 60 more • But we will not take a position for this decision, so 0 contracts

  14. Projected Pledge • USTs [.75 * 1.10 * (198.136+313.638)]+ .15*(0*10) = 422.214 Still Held T-Bills 0 168 maturing UST 1yr 90 28 maturing UST 5yr 258 6 maturing 348 202 maturing We are currently about 74 under the pledge!

  15. #2: Deposit/Loan Production • Assume all deposits change by 1.4  2.1 • From text: Prime +15.3, High +21.4, Medium +27 due to rates and commitm’t usage. • Synd, refill; RE, Cons and CC same change (although RE seems a bit high……)

  16. #3: Balancing Assets and Liabilities through CDs & Fed Funds • Maturing CDs: 505 + 85.42 FF 3mo 185 6mo 200 1 Yr 120 • Balance from Right-side = 180.9 • Balance from Left-side = 225.0 • Don’t Need 44.1 fin’g to balance • Total = Mat’g + Bal = 590.42 – 44.1 = 546.32 or 546 • If we want FF of 48m, then 450 in CDs and let Sim cast about 48m in FF and an addt’l 48 in 3 mo CDs.

  17. Decision Form • Rates: P 10.31%; H 11.24%; M, -15BP, 12.20%; Cons 12.85%; R/E 10.65%, Sell No Old or New Loans Maintain Loan and Letter of Credit Policies • Leave CC Fee, Comm’l and Reg Ckg Acct Chgs and Credits • 3 mo CDs $200m; 6 mo CDs $150m; 1 Yr. CDs $100m; Extra $48m added w/ FF Pur of $48m • MM Svgs 7.9%; Maintain Bus Dev Budget at $3.2m • Don’t change branches and give Salary Policy of Zero (ROE < 20%) • Don’t change Off’r Effort or Time Allocations • Buy Synd Loans to Refill, $114.713m ($115m) • No Fut Contracts • Pay Dividend $1.10/sh. • USTs 74; T-Bills 74, 1yr 0, 5yr 0 • and 5 each of 3 & 10 Yr. Munis to refill • No Maximum Limits; No Securities Sales

More Related