Bank Financial Statement Analysis

Question 1

FFIEC Stands for ______ and can be defined as:

Answer 1

 The Federal Financial Institutions Examination Council (FFIEC) prescribes uniform principles, standards, and report forms for depository institutions

Question 2

Balance sheets are reported on…

Answer 2

report of conditions forms

Question 3

Income Statements are reported on…

Answer 3

report of income forms

Question 4

Retail banks focus business activities on

Answer 4

consumer banking relations

Question 5

Wholesale banks focus on

Answer 5

business activities and commercial
banking relationships.
Most wholesale banks also engage in retail banking

Question 6

Commercial Banks Assets

Answer 6

Cash and balances due from other depository institutions
Investment securities
Other loans
Provision for Loans and Losses
Net Charge-Offs
Unearned Income
Allowance for loan/lease losses
Other Assets

Question 7

Commercial Bank Liabilities

Answer 7

Core Deposits
Other Deposits
Non-deposit Liabilities
Equity

Question 8

Off-Balance-Sheet Items

Answer 8

Loan Commitments
Letters of Credit
Loans Sold
Derivative Contracts

Question 9

Time Series Analysis

Answer 9

Is the analysis of financial statements over a period of time

Question 10

Cross Sectional Analysis

Answer 10

the analysis of financial statements comparing one firm with others

Question 11

ROA stands for _________, and measures ____________________.

Answer 11

Return on Assets measures profit generated relative to the banks assets

Question 12

EM stands for ____________, and measures ___________________.

Answer 12

Equity Multiplier measures the extent to which assets are funded with equity relative to debt

Question 13

PM stands for ______ and measures ________________.

Answer 13

Profit Margin measures the ability to pay expenses and generate net income from interest and non interest income and is composed of: interest expense ratio, provision for loan loss ratio, non interest expense ratio, and tax ratio

Question 14

AU stands for __________________ and measures __________________.

Answer 14

Asset Utilization measures the amount of interest and non-interest income generated per dollar of total assets and is composed of: interest income ratio and non interest income ratio.

Question 15

NIM stands for __________ and measures ________________.

Answer 15

stands for net interest margin and measures the net return on a bank’s earning assets.

Question 16

the spread measures

Answer 16

the difference between the average yield on earning assets and the average cost on interest bearing liabilities

Question 17

Overhead Efficiency

Answer 17

measures a bank’s ability to generate noninterest income to cover noninterest expenses

Question 18

Cost efficiency is defined as

Answer 18

is defined as Cost/Income Ratio: 55% for good banks, more than 60% for bad.