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commercial banks - Coggle Diagram
commercial banks
off balance sheet activities (OBS)
contingent assets and liabilities may affect future status of FI
activities less obvious and inv to fin statement
comm banks engage free related activites (not directly related to bank activities
loan commitments
contrat to a firm a certain max at given Ir
up front fee- makes fund available through a loan commintment
comm-fee on unused comp of a loan comm
comm-letters of credit and standby letter of credit
comm-letter of credit (LCs)
contingent guarantees sold by an FI to underwrite the trade or comm performance of the buyers of the guarantees
standby letter of credit (SLCs)
guarantees issued cover contingencies that are potentially more severe and less predictable than contingencies covered under trade related or comm letters of credit
loan sold
loans roginated by the bank and then sold to other investors that can be returned to the originating institution
derivative securities
futures, forwards, swap and options taken by the FI for hedging or other purpose
allowance for loans
beggining allowance of loans loss
+
this year provision loss
-
actual change of
=end allowance for loan losses
income statement
1-intrest income (revenue from interest rates from loans)
(-) interest expense (Ir on deposits)
=non intrest income
(-) non interest expense
=net non I income
net operating income
(-) taxes
(=) net income before extra ordinary items
(+) extra ordering gains
or
(-) extra ordinary loss
= net income
Financial analysis
ROA = NI/Ta
timeseries analysis or cross sectional analysis
profit margin
NI/Total operating income
Interest expense/total operating income
provision for loan losses/total operating income
nointerest expense/total operating income
income taxes/ total operating income
Net operating margin = (TOR-TOE)/TA
net non-interest margin = non I income/TA
(non Ir income/TA)-(Non I income expense/TA)-(provisin for loan loss/TA)
spread
difference between lending and borrowing rates
NI/num of shares outstanding
earnings per share
NI-div/weighted average share outstanding
equity
min level of equity required by regulators to act as a buff againist ressision
PS/CS
surpluse capital
retained earnings
deposits
savings/CDs
borrowed funds
fedfunds/ notes/bonds