Sie sind auf Seite 1von 9

1-1

CHAPTER FIVE
The Financial Statements of Banks
and Some of Their Closest
Competitors
The purpose of this chapter is to acquaint the
students with the content, structure and
purpose of bank financial statements and to
understand how information from bank financial
statements can be used as tools to reveal how
well the banks are performing.

McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc., All Rights Reserved.


1-2

Bank Financial Statements

  Reflect services offered


  Overall size
  Analysis of performance
Important Financial Statements
 Report of Condition – Balance Sheet

 Report of Income – Income Statement

 Sources and Uses of Funds Statement

 Statement of Stockholders’ Equity

McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc., All Rights Reserved.


1-3

Report of Condition
The Balance Sheet of a Bank Showing its Assets, Liabilities and
Net Worth
Accounting Equation: Assets=Liabilities +Equity Capital (1)

Assets = Resources with future benefits that are


owned and controlled by a company
Examples: cash, supplies, equipment and land
Liabilities = What a company owes to its nonowners
(creditors)
Examples: debt to a bank in the form of a note
payable, accounts payable to suppliers
Equity = owner’s claim on assets (Owner’s equity)

Accounting System: What a company owns and what it owes

McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc., All Rights Reserved.


1-4
Report of Condition

C + S + L + MA = D + NDB + CA or EC (2)

Accumulated uses of Bank funds =


Accumulated sources of Bank funds (3)

McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc., All Rights Reserved.


1-5
The Principal Types of Accounts

C + S + L + MA = D + NDB + CA or EC

C = Cash Assets D = Deposits


S = Security Holdings NDB = Nondeposit
L = Loans Borrowings
MA = Miscellaneous CA = Capital Accounts
Assets or EC = Equity Capital

McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc., All Rights Reserved.


Assets of the Banking Firm 1-6

Cash Assets (C)

 Account is Called Cash and Deposits Due


from Bank
 Includes:
 Vault Cash
 Deposits with Other Banks
 Cash Items in Process of Collection(uncollected
checks)
 Reserve Account with the Federal Reserve/BB
 Sometimes Called Primary Reserves
Objective is to keep the size of this account as
small as possible as they earn little or no interest
income
McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc., All Rights Reserved.
1-7

Security Holdings (S)

 Money Market Securities –Secondary Reserves:


short-term govt. securities, interest-bearing time
deposit held with other banks etc.
 Investment Securities can be divided into:
 Taxable Securities: Govt. or corporate bonds and
notes
 Nontaxable Securities: tax-exempt bonds and notes
>>>Recorded in the BS at their original cost or market value, whichever is
lower
 Trading Account Securities
>Held for Resale Only
>Valued at Market Value
McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc., All Rights Reserved.
1-8

Loan Accounts (L)

 Gross Loans – Sum of All Loans


 Allowance for Possible Loan Losses
 Contra Asset Account
 For Potential Future Loan Losses
 NetLoans
 Nonperforming Loans: Due more than
90 days
 Page 135 and 136 from the text

McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc., All Rights Reserved.


1-9

Types of Loans

On the basis of purpose for borrowing money:


 Commercial and Industrial (or business) Loans

 Consumer (or household) Loans

 Real Estate (or property-based) Loans

 Financial Institution Loans

 Foreign Loans(to foreign govt./institutions)

 Agriculture Production Loans

 Security Loans( to investors and security


brokers)
 Leases(bank buying equip>to business firms)

McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc., All Rights Reserved.

Das könnte Ihnen auch gefallen