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Banking and the Financial Services Industry | |
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Credit Crisis of 2007-2009 | |
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Impact on Banks and the Banking Environment | |
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How Do Banks Differ? Trends in the Structure of U.S | |
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Banks | |
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Organizational Structure and Financial Services Business Models | |
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S-Corporation Banks | |
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Financial Services Business Models | |
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Transactions Banking versus Relationship Business Models | |
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Universal Banking | |
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Different Channels for Delivering Banking Services | |
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Branch Banking | |
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Automated Teller Machines | |
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Internet (Online) Banking | |
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Call Centers | |
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Mobile Banking | |
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Government Policies and Regulation | |
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Historical Bank Regulation | |
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Products and Services | |
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Goals and Functions of Depository Institution Regulation | |
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Ensure Safety and Soundness and Provide an Efficient and Competitive System | |
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Supervision and Examination | |
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New Charters | |
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Federal Deposit Insurance | |
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Product Restrictions: Depository Institutions versus Nondepository Institutions | |
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Shortcomings of Restrictive Bank Regulation | |
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Maintaining Monetary Stability and the Integrity of the Payments System | |
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The Role of the Central Bank in the Economy: The Federal Reserve System | |
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Monetary Policy | |
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The Federal Reserve's Crisis Management Tools | |
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The Role of Depository Institutions in the Economy | |
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Efficient and Competitive Financial System | |
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Consumer Protection | |
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Trends in Federal Legislation and Regulation | |
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Key Federal Legislation: 1970-1993 | |
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Key Federal Legislation: 1994-2000 | |
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Key Federal Legislation: 2001-2006 | |
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Key Federal Legislation: 2007-2008 | |
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Current Unresolved Regulatory Issues | |
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Capital Adequacy | |
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Regulatory Reform | |
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Analyzing Bank Performance | |
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Commercial Bank Financial Statements | |
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The Balance Sheet | |
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The Income Statement | |
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The Relationship Between the Balance Sheet and Income Statement | |
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The Return on Equity Model | |
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Profitability Analysis | |
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Expense Ratio and Asset Utilization | |
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Managing Risk and Returns | |
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Credit Risk | |
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Liquidity Risk | |
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Market Risk | |
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Operational Risk | |
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Legal and Reputation Risk | |
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Capital or Solvency Risk | |
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Off-Balance Sheet Risk | |
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Evaluating Bank Performance: An Application | |
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Profitability Analysis for PNC in 2007 | |
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Risk Analysis for PNC in 2007 | |
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PNC's Profitability versus Risk: 2003-2007 | |
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Maximizing the Market Value of Bank Equity | |
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Camels Ratings | |
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Performance Characteristics of Banks by Size | |
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Financial Statement Manipulation | |
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Off-Balance Sheet Activities | |
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Managing Noninterest Income and Noninterest Expense | |
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Noninterest Income | |
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Deposit Service Fees | |
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Noninterest Expense | |
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Key Ratios | |
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Which Lines of Business and Customers are Profitable? Line-Of-Business Profitability Analysis | |
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Customer Profitability Analysis | |
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Aggregate Profitability Results from Customer Profitability Analysis | |
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What is the Appropriate Business Mix? Strategies for Managing Noninterest Expense | |
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Cost Management Strategies | |
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Revenue Enhancement | |
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Contribution Growth | |
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The Performance of Nontraditional Banking Companies | |
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The Financial Performance of Goldman Sachs | |
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Goldman Sachs's Income Statement | |
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Goldman Sachs's Balance Sheet | |
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Key Performance Ratios | |
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Risks Faced by Goldman Sachs | |
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Goldman's Risk Profile | |
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The Financial Performance of Mutual of Omaha Bank | |
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Mutual of Omaha Bank's Risk Profile | |
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The Financial Performance of BMW Financial Services and BMW Bank of North America | |
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BMW Bank's Risk Profile | |
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Pricing Fixed-Income Securities | |
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The Mathematics of Interest Rates | |
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Future Value and Present Value: Single Payment | |
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Future Value and Present Value: Multiple Payments | |
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The Relationship Between Interest Rates and Option-Free Bond Prices | |
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The Size of Coupon Influences Bond Price Sensitivity | |
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Duration and Price Volatility | |
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Duration as an Elasticity Measure | |
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Measuring Duration | |
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Duration of a Zero Coupon Bond | |
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Comparative Price Sensitivity | |
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Recent Innovations in the Valuation of Fixed-Income Securities and Total Return Analysis | |
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Total Return Analysis | |
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Valuing Bonds as a Package of Cash Flows | |
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Money Market Yields | |
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Interest-Bearing Loans with Maturities of One Year or Less | |
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360-Day versus 365-Day Yields | |
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Discount Yields | |
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Yields on Single-Payment, Interest-Bearing Securities | |
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Managing Interest Rate Risk: GAP and Earnings Sensitivity | |
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Measuring Interest Rate Risk with GAP | |
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Traditional Static GAP Analysis | |
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What Determines Rate Sensitivity? Factors Affecting Net Interest Income | |
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Rate, Volume, and Mix Analysis | |
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Rate Sensitivity Reports | |
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Strengths and Weaknesses of Static GAP Analysis | |
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Earnings Sensitivity Analysis | |
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Exercise of Embedded Options in Assets and Liabilities | |
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Different Interest Rates Change by Different Amounts at Different Times | |
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Earnings Sensitivity Analysis: An Example | |
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Income Statement GAP | |
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Managing the GAP and Earnings Sensitivity Risk | |
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Managing Interest Rate Risk: Economic Value of Equity | |
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Measuring Interest Rate Risk with Duration Gap | |
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Duration, Modified Duration, and Effective Duration | |
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Duration Gap Model | |
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A Duration Application for Banks | |
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Economic Value of Equity Sensitivity Analysis | |
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EVE Sensitivity Analysis: An Example | |
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Earnings Sensitivity Analysis versus EVE Sensitivity Analysis: Which Model Is Better? Strengths and Weaknesses: DGAP and EVE Sensitivity Analysis | |
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A Critique of Strategies for Managing Earnings and Economic Value of Equity Sensitivity | |
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GAP and DGAP Management Strategies: What Are Your Bets? Interest Risk Management: An Example | |
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Yield Curve Strategies | |
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Using Derivatives to Manage Interest Rate Risk | |
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Characteristics of Financial Futures | |
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A Brief Example | |
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Types of Futures Traders | |
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The Mechanics of Futures Trading | |
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An Example: 90-Day Eurodollar Time Deposit Futures | |
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Expectations Embedded in Futures Rates | |
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Daily Marking-to-Market | |
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Speculation versus Hedging | |
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Speculators Take On Risk to Earn Speculative Profits | |
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Hedgers Take Positions to Avoid or Reduce Risk | |
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A Long Hedge: Reduce Risk Associated with a Decrease in Interest Rates | |
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A Short Hedge: Reduce Risk Associated with an Increase in Interest Rates | |
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Change in the Basis | |
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Basis Risk and Cross Hedging | |
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Microhedging Applications | |
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Creating a Synthetic Liability with a Short Hedge | |
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The Mechanics of Applying a Microhedge | |
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Macrohedging Applications | |
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Hedging: GAP or Earnings Sensitivity | |
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Hedging: Duration Gap and EVE Sensitivity | |
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Accounting Requirements and Tax Implications | |
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Using Forward Rate Agreements to Manage Rate Risk | |
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Forward Rate Agreements: An Example | |
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Potential Problems with FRAs | |
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Basic Interest Rate Swaps as a Risk Management Tool | |
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Characteristics | |
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Interest Rate Caps and Floors | |
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Buying an Interest Rate Cap | |
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Buying an Interest Rate Floor | |
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Interest Rate Collar and Reverse Collar | |
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Protecting Against Falling Interest Rates | |
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Strategy: Use a Basic Interest Rate Swap; Pay Floating and Receive Fixed | |
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Strategy: Buy a Floor on the Floating Rate | |
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Strategy: Buy a Reverse Collar; Sell a Cap and Buy a Floor on the Floating Rate | |
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Protecting Against Rising Interest Rates | |
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Strategy: Use a Basic Interest Rate Swap; Pay Fixed and Receive Floating | |
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Strategy: Buy a Cap on the Floating Rate | |
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Strategy: Buy a Collar | |
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Funding the Bank | |
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The Relationship Between Liquidity Requirements, Cash, and Funding Sources | |
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Recent Trends in Bank Funding Sources | |
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Characteristics of Retail-Type Deposits | |
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Transactions Accounts | |
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Nontransactional Accounts | |
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Estimating the Cost of Deposit Accounts | |
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Calculating the Average Net Cost of Deposit Accounts | |
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Characteristics of Large Wholesale Liabilities | |
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Jumbo CDs (CDs) | |
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Individual Retirement Accounts | |
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Foreign Office Deposits | |
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Borrowing Immediately Available Funds | |
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Borrowing from the Federal Reserve | |
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Other Borrowing from the Federal Reserve | |
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Federal Home Loan Bank Advances | |
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Electronic Money | |
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Check 21 Measuring the Cost of Funds | |
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The Average Historical Cost of Funds | |
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The Marginal Cost of Funds | |
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Costs of Independent Sources of Funds | |
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Weighted Marginal Cost of Total Funds | |
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Marginal Cost Analysis: An Application | |
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Funding Sources and Banking Risks | |
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Funding Sources: Liquidity Risk | |
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Funding Sources: Interest Rate Risk | |
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Funding Sources: Credit and Capital Risk | |
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Managing Liquidity | |
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Meeting Liquidity Needs | |
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Holding Liquid Assets | |
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Borrowing Liquid Assets | |
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Objectives of Cash Management | |
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Reserve Balances at the Federal Reserve Bank | |
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Required Reserves and Monetary Policy | |
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The Impact of Sweep Accounts on Required Reserve Balances | |
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Meeting Legal Reserve Requirements | |
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Historical Problems with Reserve Requirements | |
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Lagged Reserve Accounting | |
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An Application: Reserve Calculation Under LRA | |
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Correspondent Banking Services | |
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Liquidity Planning | |
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Short-Term Liquidity Planning | |
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Managing Float | |
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Liquidity versus Profitability | |
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The Relationship Between Liquidity, Credit Risk, and Interest Rate Risk | |
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Traditional Aggregate Measures of Liquidity Risk | |
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Asset Liquidity Measures | |
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Liability Liquidity Measures | |
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Longer-Term Liquidity Planning | |
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Contingency Plans | |
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Considerations in the Selection of Liquidity Sources | |
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The Effective Use of Capital | |
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Why Worry about Bank Capital? Risk-Based Capital Standards | |
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The 1986 Basel Agreement | |
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Risk-Based Elements of Basel I | |
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What Constitutes Bank Capital? Tier 3 Capital Requirements for Market Risk under Basel I | |
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Basel II Capital Standards | |
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Weaknesses of the Risk-Based Capital Standards | |
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What is the Function of Bank Capital? How Much Capital is Adequate? The Effect of Capital Requirements on Bank Operating Policies | |
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Limiting Asset Growth | |
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Changing the Capital Mix | |
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Changing Asset Composition | |
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Pricing Policies | |
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Shrinking the Bank | |
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Characteristics of External Capital Sources | |
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Subordinated Debt | |
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Common Stock | |
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Preferred Stock | |
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Trust preferred Stock | |
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TARP Capital Purchase Program | |
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Leasing Arrangements | |
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Capital Planning | |
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Applications | |
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Depository Institution Capital Standards | |
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Federal Deposit Insurance | |
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FDIC Insurance Assessment Rates | |
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Problems with Deposit Insurance | |
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Weakness of the Current Risk-Based Deposit Insurance System | |
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Overview of Credit Policy and Loan Characteristics | |
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Recent Trends in Loan Growth and Quality | |
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Measuring Aggregate Asset Quality | |