Bank Analysis
Anhdon
financial_analysis_of_commercial_banks.pptxFINANCIAL ANALYSIS OF COMMERCIAL BANKS
REGULATOR’S METHODS OF DETERMINING BANK SOUNDNESS
UNIFORM FINANCIAL INSTITUTIONS RATING SYSTEM
“CAMELS” EVALUATION COMPONENTS
CAPITAL ADEQUACY
ASSET QUALITY
MANAGEMENT
EARNINGS
LIQUIDITY
SENSITIVITY TO MARKET RISK
UNIFORM FINANCIAL INSTITUTIONS RATING SYSTEM
COMPOSITE RATING FROM 1 TO 5
1 = THE HIGHEST RATING – BASICALLY SOUND IN ALL RESPECTS
2 = FUNDAMENTALLY SOUND, WITH MODEST WEAKNESSES CONNECTABLE IN THE “NORMAL COURSE OF BUSINESS”
3 = EXHIBITS MODERATELY SEVERE TO UNSATISFACTORY WEAKNESSES REGARDING OPERATIONAL, FINANCIAL, OR COMPLIANCE OF BANK
4 = IMMODERATE VOLUME OF SERIOUS FINANCIAL WEAKNESSES, OR A COMBINATION OF OTHER CONDITIONS THAT ARE UNSATISFCTORY
5 = INSTITUTIONS WITH EXTREMEMLY HIGH IMMEDIATE OR NEAR-TERM PROBABILITY OF FAILURE
EXAMINATION OF BALANCE SHEET - ASSETS
CASH AND DUE FROM DEPOSITORY INSTITUTIONS
VAULT CASH
DEPOSITS AT THE FEDERAL RESERVE
DEPOSITS AT OTHER INSTITUTIONS AND CORRESPONDENT BANKS
INVESTMENT SECURITIES
EXAMINATION OF BALANCE SHEET - ASSETS
LOANS AND LEASES
COMMERCIAL AND INDUSTRIAL LOANS
REAL ESTATE LOANS
CONSUMER LOANS
OTHER LOANS
UNEARNED INCOME
ALLOWANCE FOR LOAN AND LEASE LOSSES
INVESTMNT SECURITIES PLUS NET LOANS AND LEASES ARE THE EARNING ASSETS OF THE BANK. THE OPERATIVE WORD HERE IS “NET” LOANS AND LEASES. LOAN LOSS RESERVES, WHEN SET ASIDE, ARE NO LONGER EARNING ASSETS, WHICH IS WHY BANKS ARE CAREFUL (USUALLY) WITH CREDIT.
5
EXAMINATION OF BALANCE SHEET – LIABILITIES & EQUITY
DEPOSITS
BORROWED FUNDS
OTHER LIABILITIES
EQUITY CAPITAL
ACCOUNTING FOR OFF-BALANCE-SHEET ASSETS & LIABILITIES
LOAN COMMITMENTS
COMMERCIAL LETTERS OF CREDIT
STANDBY LETTERS OF CREDIT
LOANS SOLD
DERIVATIVE SECURITIES
TRUST AND PROCESSING SERVICES
INCOME STATEMENT ANALYSIS
NET INTEREST INCOME
INTEREST INCOME
INTEREST EXPENSE
PROVISION FOR LOAN LOSSES
NON-INTEREST INCOME
EXTRAORDINARY ITEMS
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RETURN ON EQUITY ANALYSIS
ROE:
NET INCOME/
TOTAL EQUITY CAPITAL
ROA:
NET INCOME/TOTAL ASSETS
PROFIT MARGIN
NET INCOME/TOTAL OPERATING INCOME
ASSET UTILIZATION
TOTAL OPERATING INCOME/TOTAL ASSETS
EQUITY MULTIPLIER:
TOTAL ASSETS/TOTAL EQUITY
PROFIT MARGIN ANALYSIS
PROFIT MARGIN
INTEREST INCOME/TOTAL OPERATING INCOME
PROVISION FOR LOAN LOSS/TOTAL OPERATING INCOME
NON-INTEREST EXPENSE/TOTAL OPERATING INCOME
INCOME TAXES/TOTAL OPERATING INCOME
ASSET UTILIZATION ANALYSIS
ASSET UTILIZATION
INTEREST INCOME/TOTAL ASSETS
NON-INTEREST INCOME/TOTAL ASSETS
