Managing Risks and Returns Risk Management Market Risk Equity and Security

Managing risks and returns risk management market

This preview shows page 68 - 84 out of 84 pages.

Managing Risks and Returns Risk Management Market Risk Equity and Security Price Risk Foreign Exchange Risk Foreign Currency Translation Risk Commitments and Guarantees denominated in a foreign currency 68
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Managing Risks and Returns Risk Management Operational Risk Business Interruptions Transaction Processing Inadequate Information Systems Breaches in Internal Controls Client Liability Legal Risk Reputation Risk 69
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Managing Risks and Returns Risk Management Capital or Solvency Risk Risk of becoming insolvent Liabilities > Assets Off-Balance Sheet Risk Tier 1 Capital Common Equity + Non-cumulative Preferred Stock Risk-Weighted Assets 70
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Evaluating Bank Performance:  An Application Profitability Analysis for PNC in 2007 71
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Maximizing the Market Value of  Bank Equity Effective Management of: Assets Liabilities Off-Balance Sheet Activities Interest Rate Margin Credit risk Liquidity Non-Interest Expense Taxes 77
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Maximizing the Market Value of  Bank Equity CAMELS Ratings Capital Adequacy Asset Quality Management Quality Earnings Liquidity Sensitivity to Market Risk 78
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Maximizing the Market Value of  Bank Equity CAMELS Ratings Ratings from 1 (best) to 5 (worst) 1 & 2 Sound banks 3 Some underlying problems 4 & 5 Problem banks 79
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Maximizing the Market Value of  Bank Equity Performance Characteristics of Banks by Size Large Banks versus Small Banks Higher ROE Lower NIM Higher Charge-offs Lower Capital 81
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Financial Statement Manipulation Off-Balance Sheet Activities Window Dressing Preferred Stock Non-Performing Loans Allowance for Loan Losses Securities Gains and Losses Non-Recurring Extraordinary Items 83
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Analyzing Bank  Performance 84
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