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Bank management

Author: Koch, Timothy W. ; MacDonald, S. ScottPublisher: South-Western Cengage Learning, 2010.Edition: 7th ed.Language: EnglishDescription: 872 p. : Graphs ; 29 cm.ISBN: 9780324655780Type of document: BookBibliography/Index: Includes bibliographical references and index and glossary
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Item type Current location Collection Call number Status Date due Barcode Item holds
Book Europe Campus
Main Collection
Print HG1615 .K625 2010
(Browse shelf)
001273458
Available 001273458
Book Europe Campus
Main Collection
Print HG1615 .K625 2010
(Browse shelf)
001336770
Available 001336770
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Includes bibliographical references and index and glossary

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Bank Management Contents Chapter 1 Banking and the Financial Services Industry............................................................ 1 Credit Crisis of 2007-2009.......................................................................................... 2 How Do Banks Differ?............................................................................................... 7 Organizational Structure and Financial Services Business Models..........................17 Different Channels for Delivering Banking Services............................................... 24 Summary................................................................................................................... 26 Questions................................................................................................................... 26 Activities................................................................................................................... 27 References................................................................................................................. 28 Chapter 2 Government Policies and Regulation....................................................................... 31 Historical Bank Regulation....................................................................................... 32 Goals and Functions of Depository Institution Regulation.......................................34 Ensure Safety and Soundness and Provide an Efficient and Competitive System .. 35 Maintaining Monetary Stability and the Integrity of the Payments System............. 47 Efficient and Competitive Financial System............................................................ 52 Summary................................................................................................................... 64 Questions................................................................................................................... 65 Activities................................................................................................................... 66 References................................................................................................................. 67 Chapter 3 Analyzing Bank Performance................................................................................... 69 Commercial Bank Financial Statements................................................................... 71 The Relationship Between the Balance Sheet and Income Statement..................... 94 The Return on Equity Model.....................................................................................96 Managing Risk and Returns.................................................................................... 107 Evaluating Bank Performance: An Application..................................................... 121 Maximizing the Market Value of Bank Equity....................................................... 135 Financial Statement Manipulation.......................................................................... 140 Summary................................................................................................................. 143 Questions................................................................................................................. 144 Problems.................................................................................................................. 146 References............................................................................................................... 146 Appendix................................................................................................................. 150 Chapter 4 Managing Noninterest Income and Noninterest Expense.................................... 169 Noninterest Income................................................................................................. 173 Noninterest Expense............................................................................................... 179 Which Lines of Business and Customers Are Profitable........................................ 185 Summary................................................................................................................. 201 Questions................................................................................................................. 201 Activity.................................................................................................................... 202 References............................................................................................................... 203 Chapter 5 The Performance of Nontraditional Banking Companies................................... 205 The Financial Performance of Goldman Sachs....................................................... 206 The Financial Performance of Mutual of Omaha Bank.......................................... 215 The Financial Performance of BMW Financial Services and BMW Bank of North America................................................................................ 218 Summary.................................................................................................................. 222 Questions................................................................................................................. 223 Activities.................................................................................................................. 223 References................................................................................................................224 Chapter 6 Pricing Fixed-Income Securities............................................................................. 225 The Mathematics of Interest Rates.......................................................................... 226 Future Value and Present Value: Single Payment................................................... 226 Future Value and Present Value: Multiple Payments..............................................229 Simple versus Compound Interest........................................................................... 230 The Relationship Between Interest Rates and Option-Free Bond Prices................ 232 Duration and Price Volatility................................................................................... 238 Recent Innovations in the Valuation of Fixed-Income Securities and Total Return Analysis.............................................................................................. 243 Money Market Yields.............................................................................................. 247 Summary................................................................................................................. 251 Questions................................................................................................................ 252 Activities................................................................................................................. 254 References.............................................................................................................. 255 Chapter 7 Managing Interest Rate Risk: GAP and Earnings Sensitivity............................ 257 Measuring Interest Rate Risk with GAP................................................................ 259 Earnings Sensitivity Analysis................................................................................. 278 Income Statement GAP.......................................................................................... 287 Managing the GAP and Earnings Sensitivity Risk.................................................289 Summary................................................................................................................. 290 Questions................................................................................................................ 291 Activities................................................................................................................. 293 References.............................................................................................................. 296 Chapter 8 Managing Interest Rate Risk: Duration Gap and Economic Value of Equity.. 297 Measuring Interest Rate Risk with Duration Gap.................................................. 300 Economic Value of Equity Sensitivity Analysis.................................................... 310 Earnings Sensitivity Analysis versus EVE Sensitivity Analysis: Which Model Is Better?.......................................................................................... 315 A Critique of Strategies for Managing Earnings and Economic Value of Equity Sensitivity.....................................................................................317 Yield Curve Strategies............................................................................................ 320 Summary................................................................................................................. 321 Questions................................................................................................................ 322 Activity................................................................................................................... 324 References.............................................................................................................. 324 Chapter 9 Using Derivatives to Manage Interest Rate Risk.................................................. 327 Characteristics of Financial Futures....................................................................... 328 Speculation versus Hedging................................................................................... 338 Microhedging Applications.................................................................................... 347 Macrohedging Applications....................................................................................351 Using Forward Rate Agreements to Manage Rate Risk.........................................354 Basic Interest Rate Swaps as a Risk Management Tool........................................ 356 Interest Rate Caps and Floors.................................................................................364 Summary.................................................................................................................377 Questions................................................................................................................ 378 Activities.................................................................................................................382 References.............................................................................................................. 385 Chapter 10 Funding the Bank...................................................................................................387 The Relationship Between Liquidity Requirements, Cash, and Funding Sources.389 Characteristics of Retail-Type Deposits.................................................................394 Characteristics of Large Wholesale Liabilities...................................................... 405 Electronic Money....................................................................................................419 Check 21 ................................................................................................................ 422 Measuring the Cost of Funds..................................................................................427 The Average Historical Cost of Funds................................................................... 427 Funding Sources and Banking Risks...................................................................... 435 Summary.................................................................................................................438 Questions................................................................................................................ 439 Problems................................................................................................................. 441 Activities.................................................................................................................442 References.............................................................................................................. 443 Chapter 11 Managing Liquidity............................................................................................... 445 Meeting Liquidity Needs........................................................................................ 447 Reserve Balances at the Federal Reserve Bank..................................................... 451 Meeting Legal Reserve Requirements....................................................................456 Liquidity Planning.................................................................................................. 464 Traditional Aggregate Measures of Liquidity Risk................................................471 Longer-Term Liquidity Planning............................................................................475 Contingency Funding..............................................................................................481 Summary.................................................................................................................482 Questions................................................................................................................ 483 Activity................................................................................................................... 485 References.............................................................................................................. 485 Chapter 12 The Effective Use of Capital..................................................................................487 Why Worry about Bank Capital?........................................................................... 488 Risk-Based Capital Standards................................................................................ 490 What Constitutes Bank Capital?.............................................................................497 What Is the Function of Bank Capital?.................................................................. 503 How Much Capital Is Adequate?............................................................................507 The Effect of Capital Requirements on Bank Operating Policies..........................508 Characteristics of External Capital Sources............................................................ 512 Capital Planning....................................................................................................... 517 Depository Institution Capital Standards................................................................. 520 Federal Deposit Insurance........................................................................................522 Summary.................................................................................................................. 527 Questions..................................................................................................................528 Problems...................................................................................................................529 References................................................................................................................ 531 Appendix.................................................................................................................. 532 Chapter 13 Overview of Credit Policy and Loan Characteristics......................................... 541 Recent Trends in Loan Growth and Quality............................................................ 542 Measuring Aggregate Asset Quality........................................................................ 553 Trends in Competition for Loan Business............................................................... 555 The Credit Process................................................................................................... 555 Characteristics of Different Types of Loans............................................................565 Summary.................................................................................................................. 582 Questions..................................................................................................................582 Problems...................................................................................................................584 Activity.....................................................................................................................584 References................................................................................................................ 585 Chapter 14 Evaluating Commercial Loan Requests and Managing Credit Risk................ 587 Fundamental Credit Issues....................................................................................... 589 Evaluating Credit Requests: A Four-Part Process................................................... 594 Credit Analysis Application: Wade's Office Furniture............................................619 Managing Risk with Loan Sales and Credit Derivatives......................................... 634 Summary.................................................................................................................. 640 Questions..................................................................................................................640 Problems...................................................................................................................643 References................................................................................................................ 646 Appendix I................................................................................................................648 Appendix II.............................................................................................................. 651 Appendix III............................................................................................................. 653 Chapter 15 Evaluating Consumer Loans................................................................................. 655 Types of Consumer Loans....................................................................................... 657 Subprime Loans....................................................................................................... 666 Consumer Credit Regulations.................................................................................. 668 Credit Analysis.........................................................................................................677 Recent Risk and Return Characteristics of Consumer Loans..................................688 Summary.................................................................................................................. 690 Questions..................................................................................................................691 Problems...................................................................................................................692 Activities.................................................................................................................. 693 References................................................................................................................ 694 Chapter 16 Managing the Investment Portfolio......................................................................697 Dealer Operations and the Securities Trading Account......................................... 699 Objectives of the Investment Portfolio...................................................................701 Composition of the Investment Portfolio............................................................... 705 Characteristics of Taxable Securities..................................................................... 707 Prepayment Risk on Mortgage-Backed Securities................................................. 719 Characteristics of Municipal Securities..................................................................730 Establishing Investment Policy Guidelines............................................................ 736 Active Investment Strategies..................................................................................737 The Impact of Interest Rates on the Value of Securities with Embedded Options..................................................................................................745 Comparative Yields on Taxable versus Tax-Exempt Securities............................ 755 The Impact of the Tax Reform Act of 1986........................................................... 761 Strategies Underlying Security Swaps................................................................... 763 Summary.................................................................................................................766 Questions................................................................................................................ 767 Problems................................................................................................................. 769 Activity................................................................................................................... 771 References.............................................................................................................. 771 Chapter 17 Global Banking Activities......................................................................................773 U.S. Depository Institutions in the World Market................................................. 773 Impact of the Credit Crisis of 2007-2008...............................................................777 The European Community......................................................................................784 Universal Banking Model.......................................................................................786 Organizational Structure of U.S. Banks with Foreign Operations......................... 788 International Financial Markets..............................................................................791 International Lending............................................................................................. 794 Foreign Exchange Activities.................................................................................. 800 Summary.................................................................................................................805 - Questions................................................................................................................ 806 References.............................................................................................................. 807 Glossary Index 809 859

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