Commercial Banking Project Paper ESSAY

Commercial Banking Project Paper

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A. Commercial bank financial analysis

1. Perform the following standard ratio analysis using the 2020 end-of-year (December 31) financial statement information for the bank holding company (BHC) that you are studying. Details can be found in Chapter 12 of

the textbook. Provide a brief but informative written analysis of the results.

You can download all necessary data from the FDIC website. Go to fdic.gov and click on:

– Analysts Institution Directory Search Bank Holding Companies. – Enter the BHC name and state (or its ID #). – Click on the name of your banking company. – Click on the BHC ID link for your banking company. – On the pull-down menu, select “All Summary Information.”

NOTE: As we discussed in class, do not use the definition of “operating income” from page 389 of the

textbook. Instead, use the following more standard definition:

Operating income = noninterest income + net interest income – provisions for loan losses.

2. Construct trend lines:

 Compile trend data for your BHC for each of the five performance ratios. Use year-end data, starting in 2000 and ending in 2020.

 Compile trend data for the banking industry for each of the five performance ratios. Use year-end data, starting in 2000 and ending in 2020.

You can get banking industry data from the FDIC website:

Analysts Historical Statistics on Banking Commercial Bank Reports; or

Analysts Statistics on Depository Institutions (SDI) Retrieve Reports.

Important Note: The reports are standard for each company and the industry and all items are reported.

However, industry numbers do not need to be under the same label/heading as the individual bank

data. So, look carefully and remember: there should be absolutely no questions posed to the

professor on the commercial banking assignment.

 Prepare five graphs that compare the trend lines for your BHC to those for the industry.

 Provide a brief but informative written analysis of the results. Has your BHC differed from the averages? Or is it similar to the averages? Why?

NOTE: To answer these questions, you might want to click on some of the links within the income statements

and balance sheets for your BHC. This will reveal more detailed information and help you answer this

question. Good places to look are (a) loan portfolio composition (b) deposit funding (c) noninterest income (d)

loan quality (e) cost efficiency (f) interest margin.

Equity

Multiplier

Asset Turnover

(Utilization)

Return on

Equity

Return on

Assets Return on Sales

(Profit Margin)

There should be absolutely no questions posed to the professor on the commercial banking assignment.

The professor will not provide answers to students to prevent unfair competition. All groups need to

communicate with their group members and find answers within groups or if necessary consult other

groups since this is a “re-search” “group” project. Another approach would simply defeat the purpose.

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B. Exploring the business strategy of your bank:

1. What are the fundamental underpinnings of your bank’s financial performance? Repeat the time trend analysis from part A, but this time, compare the following financial ratios (see text book) for your banking

company to the industry averages:

 Net interest margin.

 Allowance for loan losses, as a % of assets.

 Loans to core deposits ratio.

 Loans to assets ratio.

 Noninterest income, as a % of operating income.

 Cost efficiency ratio = noninterest expense/operating income.

 Equity-to-Assets ratio.

Remember to define operating income as:

net interest income – provisions for loan losses + noninterest income.

2. Noninterest income. Calculate noninterest income/operating income for your bank in 2020. Also, analyze the components of noninterest income in 2020, dividing each type of noninterest income by total

noninterest income. Compare to the industry averages. Comment.

3. Loan portfolio. Calculate loans/assets for your bank in 2020. Also, analyze the components of the loan portfolio in 2020, dividing each type of loan by total loans. Compare to the industry averages. Comment.

4. Deposit funding. Calculate deposits/assets for your bank in 2020. Also, analyze the components of the deposit mix in 2020, dividing each type of loan by total deposits. Compare to the industry

averages. Comment.

NOTE: (a) The financial statements list many different categories of noninterest income, loans, and deposits.

So for items 2, 3, and 4 you should feel free to combine some of these categories to make your analysis best

illustrate your bank’s business strategies. (b) A good way to organize the data in 2, 3, and 4 is using pie charts.

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Instructions

 Submit the Word, Excel, and Powerpoint Files of the banking project to the assignment dropbox. Finished assignment is to be turned in through Canvas in the Assignment dropbox. You

need to submit three distinct files. In addition to the word processing file, you also need to provide an

excel file including the details of your calculations and a powerpoint presentation. The dropbox is

configured as a group dropbox (only one student from the group is supposed to submit). For that

submission, the student should include the Word, Excel, and PowerPoint documents at once. The

dropbox allows for multiple files to be attached. The instructor reserves the right to check these for

academic integrity and plagiarism using technology tools like Turnitin.com. A penalty up to 15% out

of 30% or 50 points out of 100 points may be applied to the group projects who fail to timely fulfill

this requirement. The assessment criteria can be found in Appendix C of this document.

 Submit the LINK to the recording of your Powerpoint Presentation to the assignment dropbox. All groups need to record and upload the link to the recording of their Powerpoint Presentation. The

recording will be shared with the rest of the class and will be the basis of the discussion forum on the

commercial bank project.

o Online video submission is strictly preferred to powerpoint with narration for purposes of feedback and evaluation. You should note that the bar for getting a passing grade on

powerpoint with narration may be higher than that of online video submission. A penalty up

to 7.5% out of 30% or 25 points out of 100 points may be applied to the final project grade

for the group projects who utilize powerpoint with narration instead of an online video

submission.

o The link to the finished recorded Powerpoint Presentation is to be turned in through Canvas in the Assignment dropbox. (Please DO NOT upload the actual file of the recording of your

powerpoint presentation to the assignment dropbox. Upload the link only). All groups

would need to host their videos externally (like on YouTube or Vimeo as unlisted) and share

that link in the assignment dropbox.

 If you have an account with a file backup service like Dropbox or Google Drive, you can upload the video there and share the video via a web link.

o YouTube is one option for uploading the link of your video. Remember that you can refer to Appendix B for the details.

o The link to Google Drive is https://www.google.com/drive/. You can find the instructions for Google Drive sharing

at https://support.google.com/drive/answer/2494822?hl=en.

o Link to dropbox is https://www.dropbox.com/. You can find the instructions for Dropbox sharing here at https://www.dropbox.com/en/help/274.

 Your presentation should be between 15 – 30 minutes in length.

 You may use Adobe Connect to record your presentation. Adobe Connect is an online tool that facilitates online meetings with the professor and other students. To make the best use of

Adobe Connect your computer should be equipped with a Web Cam and microphone, but

these are not necessary. Alternatively, you may use YouTube or the voice narration in

PowerPoint. However, online video submission is strictly preferred to powerpoint with

narration for purposes of feedback and evaluation. You should note that the bar for getting a

passing grade on powerpoint with narration may be higher than that of online video

submission. A penalty up to 7.5% out of 30% or 25 points out of 100 points may be applied

to the final grade of the group projects who utilize powerpoint with narration instead of an

online video submission.

 Group members should use their own discretion on the member(s) who will present the project. It can be presented by one person or include up to six people sharing the presenting

role. Regardless of who or how many present, the entire group gets one grade. Additional

information about resources, frequently asked questions will be posted as necessary on the

Commercial Banking Project Discussion Forum.

https://www.google.com/drive/
https://support.google.com/drive/answer/2494822?hl=en
https://www.dropbox.com/
https://www.dropbox.com/en/help/274
4

 Remember that the detailed instructions on how to record and upload online video or narrated powerpoint can be found in Appendix B of this document. Here is a link

from Microsoft PowerPoint that will help with powerpoint narration:

https://support.office.com/en-US/Article/Add-narration-to-a-presentation-0b9502c6-

5f6c-40ae-b1e7-e47d8741161c#bm5.

 The presentation assessment criteria and some presentation tips can be found in Appendix D of this document.

 Participate in the Discussion board for the banking project presentations and feedback. Check the Commercial Banking Project folder in the content area for the deadlines and group assignments.

Comment on the presentations of your assigned groups, pose at least four questions to your assigned

presenting group, and answer all of the questions from your class mates. A penalty up to 6% out of

30% or 20 points out of 100 points may be applied to the group projects who fail to timely fulfill this

requirement.

 Submit iPeer Confidential Peer Evaluations. You will fill out a form for each of your group members and submit. You will choose a rating for each criterion for each member. You will not see

the scores your team members assign to you and they will not see yours. It is completely anonymous.

You will only see the average of the submitted scores. Your iPeer grade is worth 10% of your overall

course grade. Students who do not participate in the iPeer Confidential Peer Evaluations will receive a

score of zero on their iPeer grade. Also, there will be a late submission penalty for late iPeer

submissions. Your iPeer evaluation grade will not be made available until the day after the group

assignment is due.

https://support.office.com/en-US/Article/Add-narration-to-a-presentation-0b9502c6-5f6c-40ae-b1e7-e47d8741161c#bm5
https://support.office.com/en-US/Article/Add-narration-to-a-presentation-0b9502c6-5f6c-40ae-b1e7-e47d8741161c#bm5

Commercial Banking Project Paper ESSAY

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