Bank Management

, by Koch, Timothy W.; MacDonald, S. Scott

Note: Supplemental materials are not guaranteed with Rental or Used book purchases.

ISBN: 9780030342974 | 003034297X
Cover: Hardcover
Copyright: 8/7/2002

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The management and regulatory environment of commercial banks has seen rapid change in recent years. This modern introduction to commercial bank management is the most current in the market and reflects changes during the last year that competing books do not. Excellent and complete coverage focuses on bank management problems now and in the 21st Century in a way that helps students apply financial concepts to a variety of credit, investment, and funding decisions.

Preface

vii

Part I - Overview of the Banking Industry and Regulation

(90)

Fundamental Forces of Change in Banking

(32)

The Fundamental Forces of Change

(20)

Increased Competition

(1)

Competition for Deposits

(1)

Competition for Loans

(4)

Competition for Payment Services

(2)

Competition for Other Bank Services

(3)

Deregulation and Reregulation

(1)

Financial Innovation

(5)

Globalization

(2)

Capital Requirements

(1)

Increased Consolidation

(1)

GE Capital Services: A Financial Conglomerate

(4)

Business Groups

(1)

Management Strategies

(2)

Competitive Responses

(1)

Summary

(3)

Bank Organization and Regulation

(56)

Structure of the Banking Industry

(10)

National versus a State Bank Charter

(1)

Unitary Thrift Charter

(2)

Commercial Banks, Savings Institutions, and Credit Unions

(1)

The Role of Commerical Banks in the Economy

(2)

Consolidations, New Charters, and Bank Failures

(2)

The Central Bank

(1)

Deposit Insurance

(1)

Organizational Form of the Banking Industry

(12)

Unit versus Branch Banking

(2)

Bank Holding Companies

(7)

Banking Business Models

(2)

Specialty Banks (Community Banks)

(1)

Bank Regulation

(11)

Reasons for Regulation

(1)

Safety and Soundness

(3)

Efficient and Competitive Financial System

(6)

Trends in Federal Legislation and Regulation

(15)

Key Federal Legislation: 1956-2001

(2)

The Depository Institutions Deregulation and Monetary Control Act of 1980

(2)

The Garn-St Germain Depository Institutions Act of 1982

(2)

The Tax Reform Act of 1986

(1)

Competitive Equality Banking Act of 1987

(1)

The Financial Institutions Reform, Recovery and Enforcement Act of 1989 (FIRREA)

(1)

The Federal Deposit Insurance Corporation Improvement Act of 1991

(4)

USA Patriot Act

(1)

Current Unresolved Regulatory Issues

(1)

Capital Adequacy

(1)

Too Big to Fail

(1)

Deposit Insurance Reform

(1)

Hedge Funds

(1)

New Powers

(1)

Summary

(2)

Appendix: Important Banking Legislation

(4)

Part II - Evaluating Bank Performance

(124)

Analyzing Bank Performance: Using the UBPR

(76)

Commercial Bank Financial Statements

(14)

The Balance Sheet

(8)

The Income Statement

104

(5)

The Relationship between the Balance Sheet and Income Statement

109

(1)

The Return on Equity Model

110

(8)

The Uniform Bank Performance Report

111

(1)

Profitability Analysis

112

(1)

Expense Ratio and Asset Utilization

113

(5)

Banking Risks and Returns: The Profitability, Liquidity, and Solvency Trade-Off

118

(9)

Credit Risk

119

(3)

Liquidity Risk

122

(2)

Market Risk

124

(1)

Operating Risk

125

(1)

Legal Reputation Risk

126

(1)

Capital or Solvency Risk

126

(1)

Maximizing the Market Value of Bank Equity

127

(1)

Evaluating Bank Performance: An Application

128

(12)

PNC's Profitability and Risk versus Peers in 2001

128

(11)

PNC's Profitability versus Risk: 1993-2001

139

(1)

Camels Ratings

140

(1)

Performance Characteristics of Different-sized Banks

141

(3)

Financial Statement Manipulation

144

(3)

Preferred Stock

145

(1)

Nonperforming Loans

145

(1)

Securities Gains and Losses

146

(1)

Nonrecurring Sales of Assets

147

(1)

Summary

147

(6)

Appendix

153

(16)

Alternative Models of Bank Performance

169

(26)

A Critique of Traditional GAAP-Based Performance Measures

170

(5)

The Appropriate Peer Group

170

(1)

Measures Based on Total Operating Revenue

171

(1)

Stock Market-Based Performance Measures

172

(1)

Customer-Focused Performance Measures

173

(2)

Line of Business Profitability Analysis

175

(8)

RAROC/RORAC Analysis

176

(2)

Funds Transfer Pricing

178

(2)

Risk-Adjusted Income and Economic Income

180

(1)

Allocated Risk Capital

181

(2)

Management of Market Risk

183

(2)

Value-at-Risk Estimate for Foreign Exchange

183

(2)

Economic Value Added

185

(3)

The Balanced Scorecard

188

(3)

Summary

191

(4)

Managing Noninterest Income and Noninterest Expense

195

(20)

Common Financial Ratios of Expense Control and Noninterest Income Growth

195

(10)

Noninterest Income

197

(3)

Noninterest Expense

200

(1)

Key Ratios

201

(1)

Operating Risk Ratio

202

(3)

Customer Profitability and Business Mix

205

(4)

Which Customers Are Profitable?

205

(1)

What Is the Appropriate Business Mix?

206

(3)

Strategies to Manage Noninterest Expense

209

(3)

Cost Management Strategies

210

(2)

Summary

212

(3)

Part III - Managing Interest Rate Risk

215

(204)

Pricing Fixed-Income Securities

217

(26)

The Mathematics of Interest Rates

218

(5)

Future Value and Present Value: Single Payment

218

(2)

Future Value and Present Value: Multiple Payments

220

(1)

Simple versus Compound Interest

221

(1)

Compounding Frequency

221

(2)

The Relationship between Interest Rates and Option-Free Bond Prices

223

(4)

Bond Prices and Interest Rates Vary Inversely

223

(2)

Bond Prices Change Asymmetrically to Rising and Falling Rates

225

(1)

Maturity Influences Bond Price Sensitivity

226

(1)

The Size of Coupon Influences Bond Price Sensitivity

227

(1)

Duration and Price Volatility

227

(5)

Duration as an Elasticity Measure

228

(1)

Measuring Duration

229

(2)

Comparative Price Sensitivity

231

(1)

Recent Innovations in the Valuation of Fixed-Income Securities and Total Return Analysis

232

(3)

Total Return Analysis

233

(1)

Valuing Bonds as a Package of Cash Flows

234

(1)

Money Market Yields

235

(4)

Interest-Bearing Loans with Maturities of One Year or Less

236

(1)

360-day versus 365-day Yields

236

(1)

Discount Yields

237

(1)

Yields on Single-Payment, Interest-Bearing Securities

238

(1)

Summary

239

(4)

The Determinants of Interest Rates

243

(46)

Determinants of Interest Rate Levels

245

(1)

Loanable Funds Theory

245

(3)

Supply of, and Demand for, Loanable Funds

245

(2)

Changes in the Supply and Demand for Loanable Funds

247

(1)

Inflation and the Level of Interest Rates

248

(8)

The Fisher Relation

250

(3)

Actual Inflation and Market Interest Rates

253

(3)

Interest Rates and the Business Cycle

256

(4)

Why Do Interest Rates Differ between Securities?

260

(1)

Term to Final Maturity

260

(11)

Yield Curves

260

(2)

Unbiased Expectations Theory

262

(2)

Forward Rates

264

(1)

Unbiased Expectations, Market Efficiency, and Arbitrage

265

(1)

Liquidity Premium 'Theory

266

(2)

Market Segmentation 'Theory

268

(1)

The Yield Curve and the Business Cycle

269

(2)

Term to Repricing Variable Rate and Floating Rate Securities

271

(1)

Default Risk

272

(2)

Default Risk Premiums

272

(1)

Bond Ratings

273

(1)

Marketability and Liquidity

274

(2)

Liquidity Effects

275

(1)

Liquidity Premiums

275

(1)

Special Features on Securities

276

(2)

Call and Put Provisions

276

(2)

Convertibility

278

(1)

Income Tax Effects

278

(2)

Municipal Securities

279

(1)

State and Local Taxes

280

(1)

Municipal Default Risk

280

(1)

Summary

280

(5)

Appendix

285

(4)

Managing Interest Rate Risk: Gap and Earnings Sensitivity

289

(34)

Measuring Interest Rate Risk with GAP

291

(1)

Traditional Static GAP Analysis

292

(14)

What Determines Rate Sensitivity?

294

(1)

Factors Affecting Net Interest Income

295

(1)

Changes in the Level of Interest Rates

296

(3)

Changes in the Relationship between Short-Term Asset Yields and Liability Costs

299

(1)

Changes in Volume

300

(1)

Changes in Portfolio Composition

300

(1)

Rate, Volume, and Mix Analysis

300

(2)

Rate-Sensitivity Reports

302

(2)

Strengths and Weaknesses: Static GAP Analysis

304

(1)

Link between GAP and Net Interest Margin

305

(1)

Earnings Sensitivity Analysis

306

(7)

Exercise of Embedded Options in Assets and Liabilities

307

(1)

Different Interest Rates Change by Different Amounts at Different Times

308

(1)

Earnings Sensitivity Analysis: An Example

308

(5)

Income Statement GAP

313

(2)

Managing the GAP and Earnings Sensitivity Risk

315

(1)

Summary

316

(7)

Managing Interest Rate Risk: Duration Gap and Market Value Of Equity

323

(20)

Measuring Interest Rate Risk with Duration GAP

324

(8)

Duration, Modified Duration, and Effective Duration

324

(2)

Duration GAP Model

326

(2)

A Duration Application for Banks

328

(2)

An Immunized Portfolio

330

(2)

Market Value of Equity Sensitivity Analysis

332

(3)

MVE Sensitivity Analysis: An Example

332

(3)

Earnings Sensitivity Analysis versus MVE Sensitivity Analysis: Which Model Is Better?

335

(1)

Strengths and Weaknesses: GAP and Earnings Sensitivity Analysis

335

(1)

A Critique of Strategies to Manage Earnings and Market Value of Equity Sensitivity

336

(4)

GAP and DGAP Management Strategies: What Are Your Bets?

337

(1)

An Example

337

(1)

Yield Curve Strategies

338

(2)

Summary

340

(3)

Financial Futures, Forward Rate Agreements, and Interest Rate Swaps

343

(38)

Characteristics of Financial Futures

344

(7)

Types of Futures Traders

345

(1)

The Mechanics of Futures Trading

346

(1)

An Example: 90-Day Eurodollar Time Deposit Futures

347

(4)

Speculation versus Hedging

351

(7)

A Long Hedge

353

(2)

A Short Hedge

355

(1)

Change in the Basis

356

(1)

Basis Risk and Cross Hedging

357

(1)

Microhedging Applications

358

(4)

Creating a Synthetic Liability with a Short Hedge

359

(1)

The Mechanics of Applying a Microhedge

360

(2)

Macrohedging Applications

362

(3)

Hedging: GAP or Earnings Sensitivity

362

(1)

Hedging: Duration GAP and MVE Sensitivity

363

(1)

Accounting Requirements and Tax Implications

364

(1)

Using Forward Rate Agreements to Manage Rate Risk

365

(2)

Forward Rate Agreements: An Example

366

(1)

Potential Problems with FRAs

366

(1)

Basic Interest Rate Swaps as a Risk Management Tool

367

(7)

Characteristics

367

(2)

Swap Applications

369

(3)

Pricing Basic Swaps

372

(1)

Comparing Financial Futures, FRAs, and Basic Swaps

373

(1)

The Risk with Swaps

373

(1)

Summary

374

(7)

Options, Caps, Floors, and More Complex Swaps

381

(38)

The Nature of Options on Financial Futures

382

(1)

Examples Using Eurodollar Futures

383

(3)

Profit Diagrams

386

(3)

Eurodollar Futures

386

(2)

Call Options on Eurodollar Futures

388

(1)

Put Options on Eurodollar Futures

389

(1)

The Use of Options on Futures by Commercial Banks

389

(9)

Positions That Profit from Rising Interest Rates

390

(1)

Profiting from Falling Interest Rates

390

(1)

Hedging Borrowing Costs

391

(1)

Hedging with 3-Month Eurodollar Futures

392

(1)

Hedging with Options on Eurodollar Futures

393

(5)

Sensitivity of the Option Premium to the Change in Eurodollar Futures Price

398

(1)

Interest Rate Caps, Floors, and Collars

398

(13)

Buying an Interest Rate Cap

399

(2)

Buying an Interest Rate Floor

401

(1)

Interest Rate Collar and Reverse Collar

402

(2)

Protecting against Falling Interest Rates

404

(3)

Protecting against Rising Interest Rates

407

(4)

Interest Rate Swaps with Options

411

(3)

Using Swaps to Reduce Borrowing Costs of a New Debt Issue

411

(1)

Using Interest Rate Swaps with a Call Option

411

(2)

Using Interest Rate Swaps with a Put Option

413

(1)

Summary

414

(5)

Part IV - Managing the Cost of Funds, Bank Capital, and Liquidity

419

(134)

Managing Liabilities and The Cost of Funds

421

(42)

The Composition of Bank Liabilities

422

(4)

Recent Trends for Large and Small Banks

423

(3)

Characteristics of Small Denomination Liabilities

426

(1)

Transactions Accounts

427

(6)

Electronic Money

428

(2)

Functional Cost Analysis

430

(3)

Service Charges

433

(1)

Calculating the Net Cost of Transaction Accounts

433

(2)

Characteristics of Large Denomination Liabilities

435

(7)

Jumbo CDs (CDs over $100,000)

435

(2)

Immediately Available Funds

437

(1)

Federal Funds Purchased

437

(1)

Security Repurchase Agreements

438

(1)

Foreign Office Deposits

439

(2)

Individual Retirement Accounts

441

(1)

Federal Home Loan Bank Advances

441

(1)

Measuring the Cost of Funds

442

(1)

Evaluating the Cost of Bank Funds

443

(8)

The Average Historical Cost of Funds

443

(1)

The Marginal Cost of Funds

444

(6)

Weighted Marginal Cost of Total Funds

450

(1)

Marginal Cost Analysis: An Application

451

(1)

Funding Costs and Banking Risk

452

(3)

Funding Sources and Interest Rate Risk

453

(1)

Funding Sources and Liquidity Risk

454

(1)

Funding Sources and Credit Risk

455

(1)

Funding Sources and Bank Safety

455

(1)

Borrowing from the Federal Reserve

455

(1)

Federal Deposit Insurance

456

(3)

Depositor Protection arid Handling Problem Institutions

457

(2)

Summary

459

(4)

The Effective Use of Capital

463

(42)

Why Worry about Bank Capital?

464

(1)

Risk-Based Capital Standards

465

(6)

The Basel Agreement

466

(1)

Risk-Based Elements of the Plan

466

(5)

What Constitutes Bank Capital?

471

(3)

FDICIA and Bank Capital Standards

474

(7)

Tier 3 Capital Requirements for Market Risk

477

(2)

Capital Requirements for Market Risk Using Internal Models

479

(1)

The New Basel Capital Accord (Basel II) and Operational Risk

480

(1)

What Is the Function of Bank Capital?

481

(3)

How Much Capital Is Adequate?

484

(1)

Weaknesses of the Risk-Based Capital Standards

484

(1)

The Effect of Capital Requirements on Bank Operating Policies

485

(4)

Limiting Asset Growth

485

(3)

Changing the Capital Mix

488

(1)

Changing Asset Composition

489

(1)

Pricing Policies

489

(1)

Shrinking the Bank

489

(1)

Characteristics of External Capital Sources

489

(3)

Subordinated Debt

489

(1)

Common Stock

490

(1)

Preferred Stock

491

(1)

Trust Preferred Stock

491

(1)

Leasing Arrangements

491

(1)

Capital Planning

492

(2)

Applications

492

(2)

Federal Deposit Insurance

494

(8)

Risk-Based Deposit Insurance

496

(1)

Problems with Deposit Insurance

497

(2)

Weakness of the Current Risk-Based Deposit Insurance System

499

(1)

Proposals to Improve Deposit Insurance

499

(3)

Summary

502

(3)

Liquidity Planning and Managing Cash Assets

505

(48)

The Relationship between Cash and Liquidity Requirements

506

(2)

Cash versus Liquid Assets

507

(1)

Objectives of Cash Management

508

(1)

Reserve Balances at the Federal Reserve Bank

509

(3)

Required Reserves and Monetary Policy

509

(2)

The Impact of Sweep Accounts on Required Reserve Balances

511

(1)

Meeting Legal Reserve Requirements

512

(9)

Recent Problems with Reserve Requirements

513

(2)

Lagged Reserve Accounting

515

(2)

An Application: Reserve Calculation under LRA

517

(2)

Reserve Planning

519

(1)

Liquidity Planning over the Reserve Maintenance Period

520

(1)

Managing Float

521

(4)

The Payment System

521

(2)

Holds on Deposited Checks

523

(1)

Daylight Overdrafts

523

(1)

Pricing Federal Reserve Check-Clearing Services

524

(1)

Managing Correspondent Balances

525

(3)

Correspondent Banking Services

526

(1)

Payment for Services

527

(1)

Computing Balance Requirements

527

(1)

Liquidity Planning

528

(4)

The Development of Liquidity Strategies

529

(1)

Liquidity versus Profitability

529

(1)

Liquidity, Credit, and Interest Rate Risk

530

(2)

Traditional Measures of Liquidity

532

(11)

Asset Liquidity Measures

532

(2)

Liability Liquidity Measures

534

(1)

Liquidity Analysis of PNC Bank and Community National Bank

535

(3)

Liquidity Planning: Monthly Intervals

538

(4)

Considerations in Selecting Liquidity Sources

542

(1)

Summary

543

(4)

Appendix

547

(6)

Part V - Extending Credit to Businesses and Individuals

553

(142)

Overview of Credit Policy and Loan Characteristics

555

(34)

Recent Trends in Loan Growth and Quality

556

(8)

Trends in Competition for Loan Business

564

(1)

The Credit Process

564

(8)

Business Development and Credit Analysis

566

(3)

Credit Execution and Administration

569

(2)

Credit Review

571

(1)

Characteristics of Different Types of Loans

572

(14)

Real Estate Loans

572

(3)

Commercial Loans

575

(9)

Agriculture Loans

584

(1)

Consumer Loans

585

(1)

Summary

586

(3)

Evaluating Commercial Loan Requests

589

(48)

Fundamental Credit Issues

590

(5)

Character of the Borrower and Quality of Data Provided

591

(1)

Use of Loan Proceeds

592

(1)

Loan Amount

592

(1)

The Primary Source and Timing of Repayment

593

(1)

Collateral

594

(1)

Evaluating Credit Request: A Four-Part Process

595

(18)

Overview of Management, Operations, and the Firm's Industry

595

(1)

Common Size and Financial Ratio Analysis

596

(6)

Cash Flow Analysis

602

(4)

Application to Prism Industries

606

(4)

Financial Projections

610

(3)

Risk-Classification Scheme

613

(1)

Credit Analysis: An Application

613

(12)

Common Size and Financial Ratios Analysis: Wade's Office Furniture

614

(5)

Cash-Based Income Statement: Wade's Office Furniture

619

(5)

Sensitivity Analysis

624

(1)

Summary

625

(6)

Appendix I

631

(2)

Appendix II

633

(2)

Appendix III

635

(2)

Evaluating Consumer Loans

637

(32)

Types of Consumer Loans

638

(7)

Installment Loans

639

(6)

Noninstallment Loans

645

(1)

Subprime Loans

645

(1)

Consumer Credit Regulations

646

(7)

Equal Credit Opportunity

646

(1)

Prohibited Information Requests

647

(1)

Credit Scoring Systems

647

(1)

Credit Reporting

647

(1)

Truth in Lending

647

(1)

Fair Credit Reporting

648

(4)

Community Reinvestment

652

(1)

Bankruptcy Reform

652

(1)

Credit Analysis

653

(11)

Policy Guidelines

654

(1)

Acceptable Loans

654

(2)

Evaluation Procedures: Judgmental and Credit Scoring

656

(1)

An Application: Credit Scoring a Consumer Loan

657

(3)

Your Beacon/FICO Credit Score

660

(1)

An Application: Indirect Lending

661

(3)

Recent Risk and Return Characteristics of Consumer Loans

664

(2)

Revenues from Consumer Loans

664

(1)

Consumer Loan Losses

665

(1)

Interest Rate and Liquidity Risk with Consumer Credit

666

(1)

Summary

666

(3)

Customer Profitability Analysis and Loan Pricing

669

(26)

Account Analysis Framework

671

(8)

Expense Components

671

(1)

Target Profit

672

(1)

Revenue Components

673

(6)

Customer Profitability Analysis: An Application to Commercial Accounts

679

(2)

Pricing New Commercial Loans

681

(7)

Risk-Adjusted Returns on Loans

682

(2)

Fixed Rates versus Floating Rates

684

(2)

Base Rate Alternatives

686

(2)

Customer Profitability Analysis: Consumer Installment Loans

688

(1)

Summary

689

(6)

Part VI - Managing the Investment Portfolio and Special Topics

695

(156)

The Investment Portfolio and Policy Guidelines

697

(48)

Dealer Operations and the Securities Trading Account

698

(1)

Objectives of the Investment Portfolio

699

(5)

Accounting for Investment Securities

700

(1)

Safety or Preservation of Capital

701

(1)

Liquidity

701

(1)

Yield

702

(1)

Diversify Credit Risk

702

(1)

Help Manage Interest Rate Risk Exposure

703

(1)

Pledging Requirements

703

(1)

Trade-Offs between Objectives

703

(1)

Composition of the Investment Portfolio

704

(1)

The Risk Return Characteristics of Investment Securities

705

(5)

General Return Characteristics

706

(1)

General Risk Characteristics

707

(3)

Regulatory Guidelines

710

(1)

Characteristics of Taxable Securities

710

(13)

Money Market Investments

710

(6)

Capital Market Investments

716

(7)

Prepayment Risk on Mortgage-Backed Securities

723

(11)

Unconventional Mortgage-Backed Securities

726

(5)

Corporate, Foreign, and Taxable Municipal Bonds

731

(1)

Asset-Backed Securities

731

(3)

Characteristics of Municipal Securities

734

(5)

Money Market Municipals

737

(1)

Capital Market Municipals

737

(1)

Credit Risk in the Municipal Portfolio

738

(1)

Liquidity Risk

739

(1)

Establishing Investment Policy Guidelines

739

(2)

Return Objectives

740

(1)

Portfolio Composition

740

(1)

Liquidity Considerations

740

(1)

Credit Risk Considerations

740

(1)

Interest Rate Risk Considerations

740

(1)

Total Return versus Current Income

741

(1)

General Portfolio Considerations

741

(1)

Optimum Size of the Loan Portfolio

741

(1)

Stability of Deposits

741

(1)

Optimal Federal Funds Position

742

(1)

Capital Requirements

742

(1)

Summary

742

(3)

Active Investment Strategies

745

(36)

The Maturity or Duration Choice for Long-Term Securities

747

(7)

Passive Maturity Strategies

747

(1)

Active Maturity Strategies

748

(3)

Interest Rates and the Business Cycle

751

(3)

The Impact of Interest Rates on the Value of Securities with Embedded Options

754

(13)

Issues for Securities with Embedded Options

754

(1)

The Roles of Duration and Convexity in Analyzing Bond Price Volatility

755

(4)

Impact of Prepayments on Duration and Yield for Bonds with Options

759

(3)

Total Return and Option-Adjusted Spread Analysis of Securities with Options

762

(5)

Comparative Yields on Taxable versus Tax-Exempt Securities

767

(4)

After-Tax and Tax-Equivalent Yields

767

(1)

The Yield Comparison for Commercial Banks

768

(2)

The Effective Tax on Incremental Municipal Interest Earned by Commercial Banks

770

(1)

The Impact of the Tax Reform Act of 1986

771

(2)

Qualified versus Nonqualified Municipals

771

(2)

Strategies Underlying Security Swaps

773

(3)

Analysis of a Classic Security Swap

773

(2)

Swap with Minimal Tax Effects

775

(1)

Leveraged Arbitrage Strategy

776

(1)

Summary

777

(4)

Global Banking Activities

781

(28)

Global Banking Participants

782

(8)

The European Community

788

(2)

Universal Banking Model

790

(2)

Organizational Structure of U.S. Banks

792

(2)

International Financial Markets

794

(2)

The Eurocurrency Market

794

(1)

The Eurobond Market

795

(1)

Eurocredits

796

(1)

International Lending

796

(6)

Short-Term Foreign Trade Financing

797

(2)

Direct International Loans

799

(3)

Foreign Exchange Activities

802

(4)

Foreign Exchange Risk

802

(1)

Currency Exchange

803

(1)

The Relationship between Foreign Exchange Rates and Interest Rates

804

(1)

Price Risk with Foreign Currencies

805

(1)

Summary

806

(3)

Financial Institution Mergers and Acquisitions

809

(42)

How Do Mergers Add Value?

818

(4)

Problem Mergers

821

(1)

Value Added from Buying Failed Thrifts

822

(1)

Valuation Procedures

822

(11)

Levels or Types of Value

823

(2)

Valuation Methods

825

(1)

Comparable Analysis

825

(1)

Price to Book Value

825

(3)

Price to Earnings per Share (EPS)

828

(1)

Price to Total Assets

829

(1)

Price to Total Deposits

830

(1)

Discounted Cash Flow (DCF)

831

(1)

Valuing Future Earnings

832

(1)

Estimating Terminal Value

832

(1)

An Application

833

(11)

Historical Performance Analysis

835

(1)

Valuation Based on Alternative Procedures

836

(8)

Implications

844

(1)

Nonfinancial Considerations That Affect Mergers and Acquisitions

844

(1)

Summary

845

(6)

References

851

(14)

Glossary

865

(12)

Index

877

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Bank Management

Summary

Table of Contents

Supplemental Materials