Depository institution failures

Depository institution failures

over 1500 bank failures between 1985 and 1993, 0 institutions failures in 2005 and 2006, 3 in 2007, very sharp increase in bank failures between 2008 and 2009, 26 in 2008

Commercial bank financial statements

most depository financial insitutions own few fixed asstes and thus exhibit low operatin leverage.

Many ban liabilitites carry short term maturities. As a result, interest expense changes coincidetally with short-run changes in market interest rates.

Many commercial bank deposits are insured by the fdic insured deposits carry below-market interest rates.

Banks operate with less equity capital than non-financial companies, wich increases financial leverega and the volatility of earning

bank assets.

Loans

real state

commercial

individual

agricultural

other loans in domestic offices

loans and leases in foreign offices.

Adjustments to loans

gross loans and leases

minus

unearned income

loan and leases loss(allowance for loan loss or ALL)

equals.

Net loans and leases

investments securities

short-term investments

one year or less

examples:

interest-bearing deposits due from other banks

fed fund sold

reverse repos

t-bills

long term investments

over one year

examples

t-notes and t-bonds

goverment agengy issues

foreign and corporate bonds

mortgage-backed securities

municipal securities:general obligation

municipal securities:revenue

investment securities

held to maturity(compro inversiones no con finalidad de venderlas si no de yo banco generar intereses para mi se mantienen hasta el termino)

trading account(los que compro con la finalidad de revenderlos)

generate trading proffits, market to market, changes in value, always a current asset

available for sale

non interest cash and due from cash

vault cash

deposits held at the federal reserve

cash items in process of colecction

largest component of this category

other assets

bank premises

OREO

often foreclosed property

bankers acceptances

Bank liabilities and stockholders equity

transaction acounts

demand deposits

pays no interest

available to all costumers

Now accounts

pays market interest rate

not available to for profit corporation

ATS accounts

pays market interest rate

not available to for profit corporation

transaction accounts

MMDA´s

pays market interest rate

limited to six cheks per month

available to all costumers

savings and time deposits

saving deposits

no maturity

time deposits

large or jumbo certified deposits

negotiable

small certified deposits

ther borrowings

fed funds purchased repurchase agreements

brokered deposits

deposits held in foreign offices

issed by the bank subsidiary outside of mexico

federal home loan bank borrowings

subordinated notes and debentures

core deposits

deposits that are not very interest rate sensitive

represent permanent fundung base

made up of:

demand deposits

now and ats accounts

MMDA´s

Savings accounts

small time deposits

non core deposits

deposits that are very interest rate sensitive

AKA

volatile liabilities

hot money

purchased liabilities

short term non core funding

consists of:

federal funds purchased

repos

large time deposits

all common and preffered equity

prefer stock

common stock

Income Statement

interest income

incldes and fees from

loans

deposits at other institutions

trading account securities

...