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Course Review

Course Review. Course Overview. Fin’l Statements Construction, S/U, Overview w /Ratios Main Asset and Liability Descriptions Mgmt by Spread over Cost of Funds Asset/ Liability Mgmt NII Frcst, Wealth Frcst Mgmt of Capital and Derivatives Regulation and Current Topics. Fin’l Statements.

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Course Review

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  1. Course Review

  2. Course Overview • Fin’l Statements • Construction, S/U, Overview w /Ratios • Main Asset and Liability Descriptions • Mgmt by Spread over Cost of Funds • Asset/ Liability Mgmt • NII Frcst, Wealth Frcst • Mgmt of Capital and Derivatives • Regulation and Current Topics

  3. Fin’l Statements • Construction • Productive assets not PP&E, but Loans/Invmts • S/U • For noting performance • For Forecasting Funding Needs • Ratios: • Profitability, Capital/Risks, Liquidity • Breakdown of ROE, ROA (Spread+Burd-OT) • Risk and Liquidity of Assets and Capital

  4. Fin’l Statements • Main Asset Descriptions • Investments • Description of USTs, Agencies and Muni’s • Tax issues with Muni Income for Banks • Investment Management Styles • Loans, Comm’l & Retail • Characteristics of Loan Class • Evaluation of Loans • Pricing Techniques

  5. Mgmt by Spread over Cost of Funds • Cost of Funds • Base is Net Deposits • Total Dep+FFPurch+FRB-Cash&DueFrom • Costs are Int and Non-Int Expenses • Total Int Paid (excluding Cap Note Int) • Non-Int Expenses from each account times its related expense multiplier (take as given) • Less Net Service Charge Income • Cost of Funds = Costs * 4 / Base

  6. Asset/ Liability Mgmt • NII Frcst (Maturity Gap) • Either by time bucket or across time buckets • NII = Gap *  R • Remember Suggested Gaps given Int Rate Frcst • Wealth Frcst (Duration Gap) • Duration of Assets and Liabilities • E = -[ DA - DL (L/A)] * (R/(1+R) * A • Remember Suggested Gaps given Int Rate Frcst

  7. Mgmt of Capital and Derivatives • Capital Adequacy • Standards, Calculation: Sim & Tiered World • Problems • CAMELS • Derivatives • Fin’l Futures • Options (Caps, Floors and Collars) • Swaps

  8. Regulation and Current Topics • Main Govm’t Players and Action Ability • System concerns of the 1930s vs. Deregulation of the 1980s and 1990s and New Millennium • Trends: • Electronic Banking • Fin’l Services • Global Mgmt

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