INANCIAL STATEMENTS AND RATIOS ANALYSIS

For this assignment, you need two year-financial statements, especially balance sheet (report of condition) and income statement (report of income), for any bank youad choose. One should belong to the pre-crisis era (say 2007 or 2008), and the other should belong to the crisis era (say 2009 or 2010 a choose only one year).

You need to compare the statements, financial ratios calculated for each year. This will be a vertical analysis (time series), analysis of a bankas performance over time. You can also enrich your analysis with horizontal analysis (cross section) by comparing your bankas performance to that of another bank or a group of banks or the whole bank industry.

I want you to show how this particular bank has been affected by the global financial crisis with respect to its own past performance and with respect to its peers in the industry. The focus is the crisisas impact on bankas risk, profitability, liquidity, market value, solvency, etc. You should calculate the relevant bank ratios discussed in your textbook. You should not only report them, but also explain them. What is the reason for dramatic changes in the ratios? For profitability analysis, Du Pont analysis will help you identify the major reasons for higher or lower ROE or ROA.

You can make your analysis stronger by incorporating descriptive comments on banksa performance during the crisis from media, academic journals, bank experts, FED, OCC, IMF, World Bank, FDIC, Treasury, White House, etc.

You can obtain the relevant financial information for your bank from the sources mentioned in the textbook (call reports by FDIC, SEC-10Ks, UBPR by the Federal Financial Institutions Examinations Council, American Banker Association, etc.). The data and analysis could be annual or quarterly. [Hint: However, beware that both year data should be either annual or quarterly. If quarterly, both year data should belong to the same quarter. When you compare your bank with its peers, they should be compared for the same time periods].

This is an individual project and I expect an assignment at the length of 5 to 10 pages. You need to submit also the financial statements in the Appendix. These will not count as pages for the page requirement. Your project should have a cover page, an Abstract (summary) of about 500 words, headings, subheadings, and a conclusion section. You should also provide the sources and references used. All pages should be numbered. If two or more students use the same bank for analysis, I will pay a particular attention how they differ in their analyses.

OUTLINE OF YOUR ASSIGNMENT

Cover page, Abstract, Introduction [short history and services provided], Part 1 [Bank Essentials], Part 2 [Risk (Liquidity, Credit, Capital, Interest Rate and Market Risks) and Return (DuPont Analysis) a Financial Statement Analysis], Conclusion, References, Appendix

PART1

You should answer these points in your assignment before conducting the financial analysis:

1) What is the bankas complete name?
2) What is the address of your bankas corporate headquarters?
3) Is your bank an independent bank or affiliated bank (part of BHC or FHC)?
4) Identify the companyas website address.
5) Identify the telephone number and e-mail address of the companyas Investor Relations Department.
6) Identify the telephone number and e-mail address of the companyas Investor Relations Department.
7) What is your companyas stock exchange trading symbol?
8) What is the current share price of your bank?
9) What is your companyas Standard Industrial Classification (SIC) and sector?
10) Locate the board of directors listing. How many board members does your company have?
11) How many of the directors are company employees, labeled inside directors? And how many are non-company directors, labeled outside directors? Why does a company want and need outside directors?
12) Leadership addresses the stockholders, typically, once a year at the annual stockholders meeting. Identify where and when this occurred, as reported in their annual report.
13) Is this bank a unit bank or branch bank? If it is a branch bank, how many branches it operates?
14) Is this a universal bank? Why? [Check your text book about what a universal bank is]
15) Fill in the cells for the relevant data for your bank. Based on your preliminary review, is your company performing better than, equal to, or less favorably than in the prior year or year before? Briefly explain.

Financial Highlights

Categories 2010 2009 2008
Total Assets
Total Liabilities
Total Equity
CASH
SECURITIES
GROSS LOANS
ALLOWANCE FOR LOANS
NET LOANS
MISCELLANEOUS ASSETS
Interest Income
Interest Expense
Net Interest Income
Non-interest income
Non-interest expense
Net Non-interest income
Provision for loan losses
NET INCOME


PART II
Conduct a return (DuPont) and risk (liquidity, credit, market, capital and interest rate) analysis