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7. The liability structure of bank balance sheets tends to
reflect a shorter maturity structure than does
the asset portfolio with relatively more liquid instruments such
as deposits and interbank borrowings
used to fund less liquid assets such as loans. Thus, maturity
mismatch of interest rate risk and liquidity
risk are key exposures concerns for bank managers.
8. Assets ($Millions):
Net Loans $29,981
Investment Securities $5,334
Cash $2,660
Other Assets $1.633
Premises $1,078
Intangible Assets $758
Federal Funds Sold $110
Total Assets $41,554
I would classify this as a regional bank due to it having assets
worth over one billion dollars and it relies
mostly on deposits for liquidity not borrowed or non-deposit
funds.
9. OBS activities include various types of guarantees (such as
letters of credit), which often have a strong
insurance underwriting element, and making future commitments to
lend. OBS activities also involve
engaging in derivative transactions futures, forwards, options,
and swaps.
9a. OBS activities move onto the balance sheet when a contingent
event occurs.
9b. When banks move activities off the balance sheet, they hope
to earn additional fee income to
complement declining margins or spreads on their traditional
lending business. At the same time, they
can avoid regulatory costs or taxes since reserve requirements
and deposit insurance premiums are
not levied on off-balance sheet activities.
9c. OBS activities can involve risks that add to the overall
insolvency exposure of an FI.
10a. The average annual growth rate in OBS total commitments
over the 1992-2009 period was 130.85%
20%.
Year Total OBS Assets
Growth Rate
between Given Years
1992 $10,075.80
1996 $22,814.70 126.43% =
(22,814.70-
10,075.80/10,075.80)
2003 $78,032.80 242.03%
2007 $176,763.50 126.52%
2009 $226,993.00 28.42%
Average Annual Growth
Rate
130.85% = Sum of
Growth Rates/4
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values date Year
10075.8 12/31/1992 0
22814.7 12/21/1996 4
78032.8 12/31/2003 11
176763.5 12/31/2007 15
226993 9/30/2009 17
AAGR Formula used
20% LOGEST(A2:A6,C2:C6)-
1
20% RATE(17,0,-A2,A6)
10b. Notional amount of credit derivates (60%) , commitments to
buy foreign exchange, spot, and
forward, notional value of outstanding swaps (28%), option
contracts and commodities (25%), and
option contracts on interest rates (21%), are the categories of
contingencies have had the highestannual growth rates.
10c. The significant growth in derivative securities activities
by commercial banks has been a direct
response to the increased interest rate risk, credit risk, and
foreign exchange risk exposures they have
faced, both domestically and internationally. These contracts
offer banks a way to hedge these risks
without having to make extensive changes to the balance
sheet.
11a. State banking commission, FDIC
11b. State banking commission, FDIC, FRB (all holding companies
are regulated by FRB?)
11c. State banking commission, FRB
11d. OCC, FRB (All nationally charted banks are automatically
members of FRS page 51, line 2)
11e. OCC, FRB
12. The main features of the 1994 Riegle-Neal Interstate Banking
and Branching Efficiency Act are:
a) Starting in September 1995, it permitted bank holding
companies to acquire banks in otherstates
b) Invalidated the laws of states that allowed interstate
banking only on a regional or reciprocalbasis.
c) Beginning in June 1997, bank holding companies were permitted
to convert out-of-statesubsidiary banks into branches of a single
interstate bank.
d) Newly chartered branches also permitted interstate if allowed
by state law.The major impact on commercial banking activity that
occurred from this legislation was that
nationwide branching became possible for the first time in 70
years.
