Bank Mgt. 5th Ed, Chapter 2

Bank Mgt. 5th Ed, Chapter 2 - Chapter 2 Understanding A...

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Commercial Banking 1 Chapter 2 Understanding A Bank’s Understanding A Bank’s Financial Statements Financial Statements
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Commercial Banking 2 A Bank’s Balance Sheet A Bank’s Balance Sheet Consists Of: Consists Of: Assets Liabilities and Net Worth *
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Commercial Banking 3 What Are The Assets? What Are The Assets? Cash And Due From Banks Short-term Instruments Investment Securities Trading Account Securities Loans The Reserve For Loan Losses Net Loans * continued
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Commercial Banking 4 What Are The Assets? What Are The Assets? (Continued) (Continued) Direct Lease Financing Other Real Estate Owned Other Assets *
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Commercial Banking 5 Detailed Look At Assets Detailed Look At Assets Cash & Due From Banks Includes Four Categories: Deposits with Federal Reserve to meet legal Deposits with correspondent banks, which is a means for non-Fed members to meet reserve Cash items in process of collection *
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Commercial Banking 6 Detailed Look At Assets Detailed Look At Assets (Continued) (Continued) Short-term Instruments such as Fed funds sold, securities purchased to resell, and other banks’ certificates of deposit. Investment Securities Interest bearing debt securities a bank owns. Trading Account Securities These are securities held for resale within short times *
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Commercial Banking 7 Detailed Look At Assets Detailed Look At Assets (Continued) (Continued) Loans Commercial Loans, which are short or intermediate term loans. Consumer Loans, which include auto loans, other consumer durable loans, home improvement loans, credit card loans, and other single-payment loans to finance personal items. Real Estate Loans, including temporary Other Loans, that do not fit above categories.
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Commercial Banking 8 Detailed Look At Assets Detailed Look At Assets (Continued) (Continued) The Reserve For Loan Losses represents the balance in the valuation portion of bank’s bad debt reserve, to absorb future loan losses. IRS rules are strict for this account. Net Loans are the total of all loans less the reserve for loan loss account. Since 1976, only net loans are reported as assets. *
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Commercial Banking 9 Detailed Look At Assets Detailed Look At Assets (Continued) (Continued) Direct Lease Financing consists of the outstanding balances on all types of property held for the purpose of lease financing.
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This note was uploaded on 09/30/2010 for the course FIN 468 taught by Professor Bexley during the Fall '10 term at Sam Houston State University.

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Bank Mgt. 5th Ed, Chapter 2 - Chapter 2 Understanding A...

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