Bank Analysis

Bank Analysis

Please follow the Instructions very carefully. There will be a research project in which you will need to utilize the online databases / resources to obtain your information. You will need to set up and use Excel to present your information in a report.(Preferred not required) You can find details on the project at the end of this syllabus. This project will take you at least 20 hours to complete. It should be approximately 10 pages (includes any spreadsheets you need to support the written analysis). It should be double spaced in 12 point Times New Roman font.



Project Bank Analysis

You will need to choose your bank. You will need to sign up for the project.  Make sure to choose a commercial bank.  Your choice of bank is subject to the instructor’s approval. If you do choose any bank that has any unusual activity such as mergers  or divestitures you will need to factor that into your discussion. The bank you choose must be a US bank or a US subsidiary of a foreign bank that has data available in the form of the Uniform Bank Performance Report. You cannot choose a bank that does not have 3 years of data.

How to get a Uniform Bank Performance Report


  1. Type in your browser
  2. At the home page look for quick links and choose Analysts (double click)
  3. Under Data & Statistics Choose Uniform Bank Performance
  4. This will take you to the home page of the Uniform Bank Performance Report
  5. Scroll down about half way until you see UBPR reports underlined—Double click
  6. This will take you to search
  7. Under Report choose Uniform Bank Performance
  8. Under Institution Name type the name of the bank you want…hit Enter.  If nothing comes up you will have to find the name of the bank, for example if you put in Key Corp you will not get anything because the bank name is Key Bank.
  9. Results will come up—find your bank in the results—then double click. If you get a direct hit the first time it will take you directly to Select Report Format.
  10. Take you to Select Report Format—choose custom—use 12/31/2017, 12/31/2016, 12/31/2015 and 12/31/2014. (You will have to wait until after February 1st to get these numbers. 12/31/2017 will not be available until then.) Then choose Generate (Pop up blocker must be disabled) This will take you to View Report—Select all pages to print.( Click table of Contents and you should then see checks in all pages.)  Also make sure to print landscape and if you have option enable shrink to fit for best printing results.  Print full report.

SEE FILE ON BLACKBOARD  IN THE SYLLABUS FILE NAMED  WHERE TO GET THE NUMBERS ON THE UBPR.  You will need to prepare this table for your bank.  Although you are not required, it will you’re your analysis less wordy if you include it as an exhibit.

Bank Performance Project for Bank Management FIN 461 –You are required to answer all these questions.  Remember that elevator analysis is no analysis.  By that I mean don’t just tell me that this increased or that decreased.  Explain why even if there is not a follow up question that asks you do so.  I strongly suggest that you read the questions and answer them as we cover the material in class.  This should minimize last minute rush.

I strongly suggest that you visit your bank’s web site and read information under Investor Relations tab for information that will help.  At the very least read management’s comments in the 10K.

  1. Give a brief basic introduction to the bank you choose. This should include location, number of branches, employees, who is the primary regulator, the name of the holding company if applicable; type of bank, service area and anything else you think may be of interest. Also make sure to check if any mergers or major acquisitions or divestitures occurred during the analysis period.
  2. Discuss the stock price performance of the holding company of the bank during the past three years. Remember the holding company may have other assets than the bank. But for almost all BHCs the bank is the largest asset. The stock price is not on the UBPR.  You can find it on Yahoo finance, Stock Tracker or similar web sites. Compare Yearly returns to return of some broader Index such as S&P 500 or an index of bank stocks. These are readily available on the Internet. Why did your bank either outperform or underperform the market? This to consider-stock splits, stock buybacks and the like.  Remember what you learned in your other Finance classes.
  3. Describe the behavior of your bank’s ROA and ROE over the past three years. How does the performance of ROA and ROE relate to that of the peer group over this period based on the results on the Uniform Bank Performance Report, given the relationship ROE=ROA times the equity multiplier (asset/equity) has your ROE been driven more by changes in ROA or by changes in the equity multiplier? What are the main factors that account for the behavior of your ROA over this period?
  4. Describe the behavior of your Bank’s efficiency ratio over the 3 years? How does it performance relate to the peer group?  What factors have affected your efficiency ratio over this time period?
  5. Describe the behavior of your bank’s net interest margin (NIM) over the past three years? How does it performance relate to the peer group? What factors have affected your NIM over this time period? Is it a volume or a mix effect?
  6. Describe your bank’s approach to liquidity measurement (Look at the management discussion in the 10K and the investor relation’s material and present data that indicates whether your bank is more or less liquid than banks in your peer group. What are the primary pros and cons of above-average liquidity? Of below average liquidity?
  7. How does your bank measure its interest rate exposure? What do the most recent measures show about the size of this exposure? If your bank wishes to reduce its interest rate exposure, what tactics might it use to produce such a result? Do you believe your bank is positioned for an increase in interest rates?  Why or why not?
  8. What is your bank’s current level of non-performing (nonaccrual) loans to total loans and has it been increasing or decreasing? How does it performance relate to the peer group?  What factors have affected this over this time period? Describe any other credit risk ratios that affected the bank’s performance?
  9. Describe the behavior of your Bank’s capital ratios over the 3 years?  How does it performance relate to the peer group?  What factors have affected the capital ratio over this time period? Is the bank adequately capitalized  (Remember to look at risk based capital information on the UBPR)

An example of a why answer.


KeyBank’s stock price did not enjoy the run-up that its peers enjoyed because the market disliked the markets that were their main markets.  Even though Key has a national presence, their main markets are in cities that are not associated with growth such as Rochester, NY, Cleveland, Ohio and Albany NY.  However, with the acquisition of First Niagra, the market realized that the First Niagra’s consumer platform would fill a niche that Key has not been able to successfully infiltrate.  This signaled increase growth prospects.

Huntington Bank earning.

Average earning assets for the 2016 third quarter increased $16.4 billion, or 26%, from the year-ago quarter. The increase was driven by:

  • $5.2 billion, or 26%, increase in average C&I loans and leases, impacted by the mid-quarter FirstMerit acquisition. This increase also reflects organic growth in equipment finance leases, automobile dealer floorplan lending, and corporate banking.
  • $4.4 billion, or 32%, increase in average securities, impacted by the mid-quarter FirstMerit acquisition, the reinvestment of cash flows and additional investment in Liquidity Coverage Ratio (LCR) Level 1 qualifying securities, and a $0.8 billion increase in direct purchase municipal instruments in our Commercial Banking segment, offset by sales of certain securities following the closing of the FirstMerit acquisition.
  • $2.5 billion, or 28%, increase in average automobile loans, impacted by the mid-quarter FirstMerit acquisition. The 2016 third quarter represented the eleventh consecutive quarter of greater than $1.0 billion in automobile loan originations, while maintaining our underwriting consistency and discipline.
  • $1.1 billion, or 20%, increase in average commercial real estate (CRE) loans, impacted by the midquarter FirstMerit acquisition.
  • $1.0 billion, or 16%, increase in average residential mortgage loans, impacted by the mid-quarter FirstMerit acquisition as well as increased demand for residential mortgage loans across our footprint.
  • $0.9 billion increase in RV and marine finance loans, reflecting the acquisition of the product offering in the FirstMerit transaction.
  • $0.7 billion, or 9%, increase in average home equity loans, impacted by the mid-quarter FirstMerit acquisition.

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