Finance project comparing two banks

Guidelines for Writing the Research Report

A FIN 4324 course requirement is to analyze, evaluate, and create a Microsoft Word digital report comparing two South Florida Community Banks for five-year (5) period ending December 31, 2020. As you complete your research and begin writing the report, please follow these guidelines:

1. All figures must be current, which means obtaining from the FDIC/FFIEC website (

) all financial information for both banks. The information may be found by clicking on the Researchers and Analysts tab, the 5th tab under Quick Links (left side of page) and then on the next page Uniform Bank Performance (under Data and Statistics (middle column top, 2nd tab.)

2. Refer to the research report format below. Wherever it states Financial Institution A and B, it means that you insert the actual names of both institutions.

3. All comparisons must be presented in landscape form side by side in a Microsoft Excel spreadsheet. The text portion, as well as the financial data for Institution A, is to be presented towards the left side of the center of the page. For Institution B, insert it towards the right side of the center. In this manner, you can easily read and quickly review and analyze the type of services offered, or the numbers for the same financial accounts without having to re-type the same information, or the name of the account twice. It is difficult to analyze numbers when they are presented in a row instead of columnar format or in a different page. Today, most financial statements and accounting reports show the most current numbers first to the left side of the page, and the older numbers to their right (see below).
4. The table comparison should be for the five (5) years ended Dec 31 shown as follows: (in million) (000) which means that if the institution has $500 million in assets, and loans comprise $ 300 million, it will be presented as shown below: The most current year is shown first (to the left side) and the oldest year last (to the right)

Total Loans

Name Bank A

Name Bank B

Dec. 31

2020

2019

2018

2017

2016

2020

2019

2018

2017

2016

Loans

$300.5

$275.3

$250.3

$225.4

$225.2

$305.3

$300.2

$299.7

$285.3

$275.0

5. You see how easily is to compare the amount of total loans for each bank for each year by looking across the page. You only have to type the account loans only once.

Note: The FFIEC numbers appear in 000 (thousands) which mean the last three numbers from right to left represent thousands, and the fourth to the sixth numbers represent millions. The seventh number is then at least a billion.

6. You need to analyze in this manner the major balance sheet and income accounts shown previously.

7. When you present the loan section, please break it down by type: Real Estate, Commercial, Consumer, other, as shown on the FFIEC Report, as well as the Allowance for Loan Losses Account (Balance Sheet statement) together with the Provision for Loan and Lease Losses (income statement).

8. When you complete the comparison for each account, then show below the numbers, one graph with a different color line for each bank showing the growth or reduction in assets or income and expenses as time elapses. In this case, the graph is presented differently, on the horizontal axis, the oldest year is shown first (to the left side) and the most current last (to the right). The vertical axis shows the smaller numbers towards the bottom of the graph and the larger number toward the top of the graph.

9. Please be consistent and maintain the same color for institution A and the same color for institution B on the financial tables and on the graphs.

10. Once you have inserted the financial table and the line graph for each major account, then write your trend analysis of the particular account in no more than five sentences.

11. Maintain the above described format for each account analyzed.

12. When comparing and analyzing ratios you must insert the ratios for the applicable peer group for all the five (5) periods.

13. Your analysis should discuss the trend of each bank when compared to the other and the peer group. This is very important to follow for all five periods being analyzed and evaluated.

14. Please do not forget to consult the federal and state regulatory agencies websites for any enforcement actions against the two financial institutions, especially today with the Bank Secrecy Act Compliance, (Anti-Money Laundering Laws and Regulations) and required bank policies and procedures. It is important to refer to information in the Enforcement Actions of the Federal Reserve Bank, Office of the Comptroller of the Currency, FinCEN, OFAC, and the Florida Office of Financial Regulation. Also search the local newspapers for any recent important information on the banks, as previously mentioned.

15. The information for rates paid on deposits may be found on the money page of the Sunday or Monday Miami Herald newspaper. Not all bank rates are published, so please contact the banks’ websites or call the banks. Commercial and Real Estate loan rates may not be published, as they are individually tailored, according to risk and collateral, so the banks may have to provide you a range of rates. Find out if they lend on Prime Rate, Treasury bill or notes rates or LIBOR base rates. Also determine what is their current prime rate?

16. When you arrive at the decision page, please note the following:

a) In the first case, you are a depositor, meaning you are a creditor. You are placing funds for a specific period of time at a specific rate of interest. The fact that a million-dollar deposit may not be FDIC insured, is not an acceptable reason to deny placing the deposit. The analysis is what is important, not the insurance. Is the bank liquid, profitable, operating in a safe and sound manner and of reasonable size for you to deposit that amount?

b) In the second case, you become an investor, a stockholder. What do you expect form this investment? There is no assurance that dividends will be paid, if you want to sell your shares, you may have to find a buyer in the market or sell to another stockholder willing to buy. How much has the share value grown or decreased in value during the in the last few years? What is the book value per share? What is the current market value per share? What kind of dividends have been paid in the past? If it is a new bank or a rapidly growing one, dividends may not be or cannot be paid.

c) In the third case you represent a bank which is lending funds on a short-term basis. Therefore, you are a creditor and you are approving using someone else’s money.

Good luck with this project. For a sample research report, please refer to the Assignment section of Canvas; click on the Research Digital Report Section and click again on Sample Research Paper-Comparison of Two (2) South Florida Commercial Banks. if you have any questions or doubts, please ask me during the class session, or send me an e-mail message through regular FIU E-mail only to: [email protected] or call me at (305) 632-7997. This is very important assignment, which will help you analyze financial institutions in the future, as you become an officer or customer of one or more financial institutions during your lifetime. Prior class members have indicated that they were able to receive bank employment offers because of this analytical assignment.

Footnotes and Bibliography Requirements: It is a serious academic ethical violation not to give credit to the authors and the sources from where you obtained the information.

in accordance with an acceptable manual of style.

. You must write the information of the source and then insert the web URL locator.
It is very important to show the dates on all information presented and the date of the particular publication. Do not insert the date that you retrieved the information from the web, as it is not important in this case. Please refer to a Manual of Style tab for guidance in properly inserting foot/end notes and bibliography.

The Research Paper may exceed 15 pages provided that there is no excess of unnecessary information. The report must show each page number on the bottom center or right side.

.

THIS RESEARCH PAPER WILL BE PRESENTED ONLY IN DIGITAL FORMAT WHICH WILL BE FORWARDED by the DUE DATE, not later than two Sundays prior to the end of the semester or April 11, 2021 at 11:55 p.m.

The completed report is to be sent to Professor Kerbel only through regular FIU e-mail to:

(DO Not Use Canvas E-mail or SMS Texting or WhatsApp for This Report). In addition, the format of the subject line of the e-mail message must be shown as follows:

FIN 4324-Last Name, First Name, RP-Names of the two banks analyzed-2021-04-XX (day completed).

The actual attached Microsoft Word File should be labeled as follows:

Names of the two (2) banks-RP-2021-04-XX-FIN 4324-Last Name, First Name

In addition to forwarding the assignments by e-mail to the Professor as shown above and on page 07 of the syllabus and discussed in class, each Class Member will “drop” by the due date their digital research report into the Turnitin assignment box tab located on the Canvas-Turnitin Assignment Tab.

Reports will not be accepted after the Turnitin drop box has been closed.

Please note that if any of the guidelines stated above are NOT followed, including the sample cover page shown below, your grade for this bank comparison research assignment will drop by twenty (20) points.

This two-bank comparison analysis and evaluation assignment has a value of 10% of your final course grade.

SCROLL BELOW FOR SAMPLE OF REPORT COVER PAGE & FORMAT

FIN 4324 Commercial Bank Management

RESEARCH PAPER FORMAT — Sample Cover Page and Report ___________________________________________________

A Comparative Financial Trend Analysis of:

Name of Financial Institution (A)

Vis-a-vis

Name of Financial Institution (B)

Prepared for: Marcos A. Kerbel

Participating Adjunct Professor

Department of Finance

College of Business

Florida International University

In partial fulfillment of the
requirements of

Course: FIN 4324-Commercial Bank Management

Term: Spring, 2021
By:

_____________________________

Your Full Name

(as it appears in the FIU Course Roster)

Panther Student Number
Telephone No.
E-Mail Address
April ____, 2021
(The actual day when you completed this report)

Please present the report information in
format (sideways) preferably in Microsoft Excel. Insert the data for each financial institution side by side.

Pages 2-4

I. General Bank Information: Where letters A & B appear,

General Bank Information

Name of Bank A

Name of Bank B

a) Names of Financial Institutions:

b) Head Office’s Address, City, State and Zip Code

c) Telephone and Fax Numbers:

Tel: ( )

Tel: ( )

Fax ( )

Fax: ( )

d) Website Address (Hyperlink):

e) Date Founded:

f) Primary Regulator (State, OCC and FDIC Certificate Number, if bank

General Bank Information

Name of Bank A

Name of Bank B

g) Peer Group Number & Description

h) Number of Banks in Peer Group:

i) Names of Directors and Principal Officers, such as: Chairman of Board, CEO, President, COO, CFO, and CIO and other Senior Officers only.

j) Number of Branches:

k) Number of Employees:

l) Mission Statement for each bank
(Obtain from their Websites)

m) Each Bank’s Strategy:

n) Services and Products Offered:

o) Interest Rates paid on deposits (range) Look at Miami Herald’s Business Sunday or Monday Edition (Money Section) or in banks’ websites, or call the banks for rates. The rates’ date should be as of a specific date closest to date of report. Insert date of figures and source.

p) Service Charges (look at website or obtain Service Charge schedule and Loan Rates

Financial Highlights

Bank A

Bank B

As of Dec. 31,

2020

2019

2018

2020

2019

2018

q. Total Assets

r. Total Deposits

s. Total Liabilities

t. Total Equity

u. Net Income

PLEASE SCROLL DOWN TO NEXT PAGE

II. Financial Trend Comparison (pages 5-7)

For the latest Five (5) Years ended Dec. 31, 2020, 2019, 2018, 2017, 2016

Most current year should be shown in first column (left) and oldest in the last column (right)

For each of balance sheet and income statement account categories shown below, please present a comparative numbers’ table and graph. insert only one linear graph for each of the banks and write a paragraph regarding trend for each bank for the five years under review.

Bank A

Bank B

2020

2019

2018

2017

2016

2020

2019

2018

2017

2016

Cash & Due from Banks

Investments:

Federal Funds Sold (Overnight Funds)

Bond Portfolio (Securities)

Loans

Real Estate

Commercial

Consumer

Agricultural

Total Loans

Less: Allowance for loan losses

Net loans

Fixed assets (Premises & Equipment)

TOTAL ASSETS

Pages 6-9 (Cont’d)

Bank A

Bank B

2020

2019

2018

2017

2016

2020

2019

2018

2017

2016

Deposits:

Non-interest bearing

Interest bearing

Total Deposits

Borrowings (from other banks) ·

TOTAL LIABILITIES

Stockholders’ Equity (a/k/a Equity or New Worth)

Common Stock

Surplus

Retained Earnings

Dividends Paid

Total Stockholders” Equity

TOTAL LIABILITIES & EQUITY

Income and Expense categories should be compared for the latest five (5) years ended:
December 31, 2020, 2019, 2018, 2017, 2016
Most current year should be shown in first column (left) and oldest in the last column (right)
Actual Names of Institution to be shown instead of A and B

Ratio Analyses

Bank A

Bank B

2020

2019

2018

2017

2016

2020

2019

2018

2017

2016

INCOME

Interest Income

Investment Income

Non-Interest Income

TOTAL INCOME

EXPENSES

Interest Expense

Salaries & Benefits

Provisions for Loan & Lease Loses

Other Expenses

Taxes

TOTAL EXPENSES

NET INCOME

Most current year should be shown in first column (left) and oldest in the last column (right)

III. Comparative Financial Analysis of each bank to the other and to their respective Peer Group

RATIO ANALYSES

Bank A

Bank B

Peer Group

As of Dec. 31,

2020

2019

2018

2017

2016

2020

2019

2018

2017

2016

2020

2019

2018

2017

2016

Return on Assets

Return on Equity

Efficiency Ratio

Net Interest Margin

Amount of Loan Charge-Offs

Percentage of Loan Charge-Offs to Total Loans

Number of Employees

Assets Per Employee

Average Salary per Employee

PLEASE SCROLL DOWN TO NEXT PAGE

Page 9

IV. Search the Web-Sites of the Florida State Office of Financial Regulation, the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, the Federal Reserve Bank and the Securities and Exchange Commission for any Consent or Cease and Desist Orders, (C&Ds’) Memos of Understanding (MOUs’) and Other Regulatory Enforcement Actions, as well as newspaper articles for important recent information on each of the two banks. For banks, you may use the Bauer Financial Reports (

Star Ratings

).
Also consult the Miami Herald, The Miami Daily Business Review and the South Florida Business Journal.

REGULATORY ENFORCEMENT ACTIONS

V. Complete the Analysis by Doing a Comparative

SWOT ANALYSIS for both Financial Institutions

REGULATORY ENFORCEMENT ACTIONS

Name of Bank A

Name of Bank B

SWOT ANALYSIS ·

Strengths

Weaknesses

Opportunities

Threats

PLEASE SCROLL DOWN TO NEXT PAGE

Page 10

VI. CONCLUSION AND DECISIONS Based on the above analysis, you arrive at the conclusion by writing a paragraph for each of the following three decisions; whether you will do it for one bank or the other only, for both banks, or for none of the banks.

You must support your conclusions with reasoned statements as to why yes or why not with respect, to either bank, both banks, or neither bank

DECISIONS

1. Would you place a personal deposit $1 million dollars or more in these two institutions or banks? Therefore, being at risk, since the FDIC insurance coverage is only for $250,000.00. FDIC coverage should be considered irrelevant for purposes of this analysis.

2. Would you invest at least $500,000 in these two institutions? Why yes or no and why?

3. If you were a member of the Board of Directors of a third bank and you sat on that Bank’s Credit Committee, would you grant a $1-million-dollar line of credit for Overnight or Term Federal Funds to these financial institutions?

VII. BIBLIOGRAPHY:

Web-Site addresses by themselves are not acceptable. All sources are to be shown in accordance with an acceptable manual of style

PLEASE SCROLL DOWN TO NEXT PAGE

Rev. 2021-01
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