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Bank management

Author: Timothy W Koch; Steven Scott MacDonald
Publisher: Australia ; Mason, Ohio : South-Western CENGAGE Learning, ©2010.
Edition/Format:   Print book : English : 7th edView all editions and formats

"Bank Management".


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Material Type: Internet resource
Document Type: Book, Internet Resource
All Authors / Contributors: Timothy W Koch; Steven Scott MacDonald
ISBN: 9780324655780 0324655789
OCLC Number: 551196046
Notes: Includes index.
Description: xvi, 872 pages : illustrations ; 29 cm
Contents: 1. Banking and the Financial Services Industry --
Credit Crisis of 2007-2009 --
Impact on Banks and the Banking Environment --
How Do Banks Differ? Trends in the Structure of U.S. Banks --
Organizational Structure and Financial Services Business Models --
S-Corporation Banks --
Financial Services Business Models --
Transactions Banking versus Relationship Business Models --
Universal Banking --
Different Channels for Delivering Banking Services --
BranchBanking --
Automated Teller Machines --
Internet (Online) Banking --
Call Centers --
Mobile Banking --
2. Government Policies and Regulation --
Historical Bank Regulation --
Products and Services --
Goals and Functions of Depository Institution Regulation --
Ensure Safety and Soundness and Provide an Efficient and Competitive System --
Supervision and Examination --
New Charters --
Federal Deposit Insurance --
Product Restrictions: Depository Institutions versus Nondepository Institutions --
Shortcomings of Restrictive Bank Regulation --
Maintaining Monetary Stability and the Integrity of the Payments System --
The Role of the Central Bank in the Economy: The Federal Reserve System --
Monetary Policy --
The Federal Reserve's Crisis Management Tools --
The Role of Depository Institutions in the Economy --
Efficient and Competitive Financial System --
Consumer Protection --
Trends in Federal Legislation and Regulation --
Key Federal Legislation: 1970- --
1993. Key Federal Legislation: 1994- --
2000. Key Federal Legislation: 2001- --
2006. Key Federal Legislation: 2007- --
2008. Current Unresolved Regulatory Issues --
Capital Adequacy --
Regulatory Reform --
3. Analyzing Bank Performance --
Commercial Bank Financial Statements --
The Balance Sheet --
The Income Statement --
The Relationship Between the Balance Sheet and Income Statement --
The Return on Equity Model --
Profitability Analysis --
Expense Ratio and Asset Utilization --
Managing Risk and Returns --
Credit Risk --
Liquidity Risk --
Market Risk --
Operational Risk --
Legal and Reputation Risk --
Capital or Solvency Risk --
Off-Balance Sheet Risk --
Evaluating Bank Performance: An Application --
Profitability Analysis for PNC in --
2007. Risk Analysis for PNC in --
2007. PNC's Profitability versus Risk: 2003- --
2007. Maximizing the Market Value of Bank Equity --
Camels Ratings --
Performance Characteristics of Banks by Size --
Financial Statement Manipulation --
Off-Balance Sheet Activities --
4. Managing Noninterest Income and Noninterest Expense --
Noninterest Income --
Deposit Service Fees --
Noninterest Expense --
Key Ratios --
WhichLines of Business and Customers are Profitable? Line-Of-Business Profitability Analysis --
Customer Profitability Analysis --
Aggregate Profitability Results from Customer Profitability Analysis --
What is the Appropriate Business Mix? Strategies for Managing Noninterest Expense --
Cost Management Strategies --
Revenue Enhancement --
Contribution Growth --
5. The Performance of Nontraditional Banking Companies --
The Financial Performance of Goldman Sachs --
Goldman Sachs's Income Statement --
Goldman Sachs's Balance Sheet --
Key Performance Ratios --
Risks Faced by Goldman Sachs --
Goldman's Risk Profile --
The Financial Performance of Mutual of Omaha Bank --
Mutual of Omaha Bank's Risk Profile --
The Financial Performance of BMW Financial Services and BMW Bank of North America --
BMW Bank's Risk Profile --
6. Pricing Fixed-Income Securities --
The Mathematics of Interest Rates --
Future Value and Present Value: Single Payment --
Future Value and Present Value: Multiple Payments --
The Relationship Between Interest Rates and Option-Free Bond Prices --
The Size of Coupon Influences Bond Price Sensitivity --
Duration and Price Volatility --
Duration as an Elasticity Measure --
Measuring Duration --
Duration of a Zero Coupon Bond --
Comparative Price Sensitivity --
Recent Innovations in the Valuation of Fixed-Income Securities and Total Return Analysis --
Total Return Analysis --
Valuing Bonds as a Package of Cash Flows --
Money Market Yields --
Interest-Bearing Loans with Maturities of One Year or Less --
360 Day versus 365-Day Yields --
Discount Yields --
Yields on Single-Payment, Interest-Bearing Securities 7. Managing Interest Rate Risk: GAP and Earnings Sensitivity --
Measuring Interest Rate Risk with GAP. Traditional Static GAP Analysis --
What Determines Rate Sensitivity? Factors Affecting Net Interest Income --
Rate, Volume, and Mix Analysis --
Rate Sensitivity Reports --
Strengths and Weaknesses of Static GAP Analysis --
Earnings Sensitivity Analysis --
Exercise of Embedded Options in Assets and Liabilities --
Different Interest Rates Change by Different Amounts at Different Times --
Earnings Sensitivity Analysis: An Example --
Income Statement GAP. Managing the GAP and Earnings Sensitivity Risk --
8. Managing Interest Rate Risk: Economic Value of Equity --
Measuring Interest Rate Risk with Duration Gap --
Duration, Modified Duration, and Effective Duration --
Duration Gap Model --
A Duration Application for Banks --
Economic Value of Equity Sensitivity Analysis --
EVE Sensitivity Analysis: An Example --
Earnings Sensitivity Analysis versus EVE Sensitivity Analysis: Which Model Is Better? Strengths and Weaknesses: DGAP and EVE Sensitivity Analysis --
A Critique of Strategies for Managing Earnings and Economic Value of Equity Sensitivity --
GAP and DGAP Management Strategies: What Are Your Bets? Interest Risk Management: An Example --
Yield Curve Strategies --
9. Using Derivatives to Manage Interest Rate Risk --
Characteristics of Financial Futures --
A Brief Example --
Types of Futures Traders --
The Mechanics of Futures Trading --
An Example: 90-Day Eurodollar Time Deposit Futures --
Expectations Embedded in Futures Rates --
Daily Marking-to-Market --
Speculation versus Hedging --
Speculators Take On Risk to Earn Speculative Profits --
Hedgers Take Positions to Avoid or Reduce Risk --
A Long Hedge: Reduce Risk Associated with a Decrease in Interest Rates --
A Short Hedge: Reduce Risk Associated with an Increase in Interest Rates --
Change in the Basis --
Basis Risk and Cross Hedging --
Microhedging Applications --
Creating a Synthetic Liability with a Short Hedge --
The Mechanics of Applying a Microhedge --
Macrohedging Applications --
Hedging: GAP or Earnings Sensitivity --
Hedging: Duration Gap and EVE Sensitivity --
Accounting Requirements and Tax Implications --
Using Forward Rate Agreements to Manage Rate Risk --
Forward Rate Agreements: An Example --
Potential Problems with FRAs --
Basic Interest Rate Swaps as a Risk Management Tool --
Characteristics --
Interest Rate Caps and Floors --
Buying an Interest Rate Cap --
Buying an Interest Rate Floor --
Interest Rate Collar and Reverse Collar --
Protecting Against Falling Interest Rates --
Strategy: Use a Basic Interest Rate Swap --
Pay Floating and Receive Fixed --
Strategy: Buy a Floor on the Floating Rate --
Strategy: Buy a Reverse Collar --
Sell a Cap and Buy a Floor on the Floating Rate --
Protecting Against Rising Interest Rates --
Strategy: Use a Basic Interest Rate Swap --
Pay Fixed and Receive Floating --
Strategy: Buy a Cap on the Floating Rate --
Strategy: Buy a Collar --
10. Funding the Bank --
The Relationship Between Liquidity Requirements, Cash, and Funding Sources --
Recent Trends in Bank Funding Sources --
Characteristics of Retail-Type Deposits --
Transactions Accounts --
Nontransactional Accounts --
Estimating the Cost of Deposit Accounts --
Calculating the Average Net Cost of Deposit Accounts --
Characteristics of Large Wholesale Liabilities --
Jumbo CDs (CDs). Individual Retirement Accounts --
Foreign Office Deposits --
Borrowing Immediately Available Funds --
Borrowing from the Federal Reserve --
Other Borrowing from the Federal Reserve --
Federal Home Loan Bank Advances --
Electronic Money --
Check 21 --
Measuring the Cost of Funds --
The Average Historical Cost of Funds --
The Marginal Cost of Funds --
Costs of Independent Sources of Funds --
Weighted Marginal Cost of Total Funds --
Marginal Cost Analysis: An Application --
Funding Sources and Banking Risks --
Funding Sources: Liquidity Risk --
Funding Sources: Interest Rate Risk --
Funding Sources: Credit and Capital Risk --
11. Managing Liquidity --
Meeting Liquidity Needs --
Holding Liquid Assets --
Borrowing Liquid Assets --
Objectives of Cash Management --
Reserve Balances at the Federal Reserve Bank --
Required Reserves and Monetary Policy --
The Impact of Sweep Accounts on Required Reserve Balances --
Meeting Legal Reserve Requirements --
Historical Problems with Reserve Requirements --
Lagged Reserve Accounting --
An Application: Reserve Calculation Under LRA. Correspondent Banking Services --
Liquidity Planning --
Short-Term Liquidity Planning --
Managing Float --
Liquidity versus Profitability --
The Relationship Between Liquidity, Credit Risk, and Interest Rate Risk --
Traditional Aggregate Measures of Liquidity Risk --
Asset Liquidity Measures --
Liability Liquidity Measures --
Longer-Term Liquidity Planning --
Contingency Plans --
Considerations in the Selection of Liquidity Sources 12. The Effective Use of Capital --
Why Worry about Bank Capital? Risk-Based Capital Standards --
The 1986 Basel Agreement --
Risk-Based Elements of Basel I. What Constitutes Bank Capital? Tier 3 Capital Requirements for Market Risk under Basel I. Basel II Capital Standards --
Weaknesses of the Risk-Based Capital Standards --
What is the Function of Bank Capital? How Much Capital is Adequate? The Effect of Capital Requirements on Bank Operating Policies --
Limiting Asset Growth --
Changing the Capital Mix --
Changing Asset Composition --
Pricing Policies --
Shrinking the Bank --
Characteristics of External Capital Sources --
Subordinated Debt --
Common Stock --
Preferred Stock --
Trust preferred Stock --
TARP Capital Purchase Program --
Leasing Arrangements --
Capital Planning --
Applications --
Depository Institution Capital Standards --
Federal Deposit Insurance --
FDIC Insurance Assessment Rates --
Problems with Deposit Insurance --
Weakness of the Current Risk-Based Deposit Insurance System --
13. Overview of Credit Policy and Loan Characteristics --
Recent Trends in Loan Growth and Quality --
Measuring Aggregate Asset Quality --
Trends in Competition for Loan Business --
The Credit Process --
Values Driven --
Current-Profit Driven --
Market-Share Driven --
Business Development and Credit Analysis --
Credit Execution and Administration --
Loan Review --
Characteristics of Different Types of Loans --
Real Estate Loans --
Commercial Loans --
Agricultural Loans --
Consumer Loans --
Venture Capital --
14. Evaluating Commercial Loan Requests & Managing Credit Risk --
Fundamental Credit Issues --
Character of the Borrower and Quality of Data Provided --
Use of Loan Proceeds --
How MuchDoes the Borrower Need? The Loan Amount --
The Primary Source and Timing of Repayment --
Secondary Source of Repayment: Collateral --
Evaluating Credit Requests: A Four-Part Process --
Overview of Management, Operations, and the Firm's Industry --
Common Size and Financial Ratio Analysis --
Cash-Flow Analysis --
Cash-Flow Analysis for Prism Industries --
Financial Projections --
Risk-Classification Scheme --
Credit Analysis Application: Wade's Office Furniture --
Common Size and Financial Ratios Analysis: Wade's Office Furniture --
Cash-Based Income Statement: Wade's Office Furniture --
Pro Forma Analysis: Wade's Office Furniture --
Evaluation of Collateral: Wade's Office Furniture --
Sensitivity Analysis --
Managing Risk with Loan Sales and Credit Derivatives --
Underwriting Loan Sales, Participations and Syndications --
Shared National Credits --
Credit Enhancements --
Credit Default Swaps --
15. Evaluating Consumer Loans --
Types of Consumer Loans --
Installment Loans --
Noninstallment Loans --
What Happens When Housing Prices Fall? Equal Credit Opportunity --
Prohibited Information Requests --
Credit Scoring Systems --
Credit Reporting --
Truth in Lending --
Fair Credit Reporting --
Community Reinvestment --
Bankruptcy Reform --
Credit Analysis --
Policy Guidelines --
Acceptable Loans --
Unacceptable Loans --
Evaluation Procedures: Judgmental and Credit Scoring --
An Application: Credit Scoring a Consumer Loan --
Your FICO Credit Score --
An Application: Indirect Lending --
Recent Risk and Return Characteristics of Consumer Loans --
Revenues from Consumer Loans --
Consumer Loan Losses --
Interest Rate and Liquidity Risk with Consumer Credit --
16. Managing the Investment Portfolio --
Dealer Operations and the Securities Trading Account --
Objectives of the Investment Portfolio --
Accounting for Investment Securities --
Safety or Preservation of Capital --
Liquidity --
Yield --
Diversify Credit Risk --
Help Manage Interest Rate Risk Exposure --
Pledging Requirements --
Composition of the Investment Portfolio --
Characteristics of Taxable Securities --
Money Market Investments --
Capital Market Investments --
Prepayment Risk on Mortgage-Backed Securities --
Alternative Mortgage-backed Securities --
Corporate, Foreign, and Taxable Municipal Bonds --
Asset-Backed Securities --
Characteristics of Municipal Securities --
Money Market Municipals --
Capital Market Municipals --
Credit Risk in the Municipal Portfolio --
Liquidity Risk --
Establishing Investment Policy Guidelines --
Return Objectives --
Portfolio Composition --
Liquidity Considerations --
Credit Risk Considerations --
Interest Rate Risk Considerations --
Total Return versus Current Income --
Active Investment Strategies --
The Maturity or Duration Choice for Long-Term Securities --
Passive Maturity Strategies --
Active Maturity Strategies --
Interest Rates and the Business Cycle --
The Impact of Interest Rates on the Value of Securities with Embedded Options --
Issues for Securities with Embedded Options --
The Roles of Duration and Convexity in Analyzing Bond Price Volatility --
Impact of Prepayments on Duration and Yield for Bonds with Options --
Total Return and Option-Adjusted Spread Analysis of Securities with Options --
Comparative Yields on Taxable versus Tax-Exempt Securities --
After-Tax and Tax-Equivalent Yields --
The Yield comparison for Commercial Banks --
The Effective Tax on Incremental Municipal Interest Earned by Commercial Banks --
The Impact of the Tax Reform Act of --
1986. Qualified versus Nonqualified Municipals --
Strategies Underlying Security Swaps --
Analysis of a Classic Security Swap --
Swap with Minimal Tax Effects --
17. Global Banking Activities --
U.S. Depository Institutions in the World Market --
Impact of the Crises of 2007- --
2008. Market Share of Foreign Financial Institutions Operating in the United States --
The European Community --
Universal Banking Model --
Organizational Structure of U.S. Banks with Foreign Operations --
International Financial Markets --
The Eurocurrency Market --
The Eurobond Market --
Eurocredits --
International Lending --
Short-Term Foreign Trade Financing --
Direct International Loans --
Foreign Exchange Activities --
Foreign Exchange Risk --
Currency Exchange --
The Relationship Between Foreign Exchange Rates and Interest Rates --
Price Risk with Foreign Currency.
Responsibility: Timothy W. Koch, S. Scott MacDonald.
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1. Banking and the Financial Services Industry. Credit Crisis of 2007-2009. Impact on Banks and the Banking Environment. How Do Banks Differ? Trends in the Structure of U.S. Banks. Organizational Read more...

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