DAY ONE - Wednesday, December 1
Registration with continental breakfast opens at 7:30 a.m.
8:30 a.m.
The Economic and Regulatory Environment
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Summary of the events leading to the current financial crisis |
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Political and economic ability of government to manage the crisis, particularly bank closings |
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Ratings agencies and their role |
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The regulatory bodies and the changing regulatory environment |
Overview of Bank Credit Analysis
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An overview of the banking sector |
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Lines of business and geographic distribution |
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Peer group comparisons |
Key Drivers in Assessing a Bank
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An introduction to the critical components of financial strength |
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CAMELS and risk management |
10:00 a.m.
Refreshment Break
10:15 a.m.
Qualitative Assessments of Management, Strategy and Structure
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Management experience and the ability to articulate vision and mission, and to execute a successful strategy |
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Ownership structure of the bank; the impact of stakeholders on performance |
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Sources of competitive advantage; the diversity of products, businesses and customers |
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Franchise value, market share and other key drivers of performance |
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Evaluating local market conditions |
12:00 p.m.
Lunch
1:00 p.m.
Quantitative Assessments of Capital and Asset Quality
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Composition and quality of capital: reported book equity, adjusted common equity, hybrid capital, economic versus regulatory capital |
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Key drivers of capital: earnings, asset valuation, capital raising |
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Risk weighted assets: Basel I vs. Basel II approach |
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Key ratios: tier one and total capital, leverage, core capital and others |
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Asset mix by type: low risk assets, government paper and inter-bank deposits, higher risk loans and investment securities, off balance sheet items, and credit derivatives |
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Individual asset considerations: size, maturity structure, book versus market value, economic sector, collateral, customer base and concentration |
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Loan portfolio management: monitoring and analysis, problem loan characteristics, adequacy of loan loss provision versus charge-offs |
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Indicators of risk appetite |
3:00 p.m.
Refreshment Break
3:15 p.m.
Case Study: Assessing Management and Capital
Day One concludes at approximately 5:00 p.m.
DAY TWO - Thursday, December 2
Continental breakfast opens at 7:30 a.m.
8:30 a.m.
Quantitative Assessment: Earnings, Profitability and Liquidity
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Components of earnings: net interest margin, fees and commissions, trading profits |
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Quality of earnings and performance risk: core versus non-core, operating expense trends, extraordinary events |
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Earnings ratios and measures: return on average assets, return on average equity, pre-tax margin, net interest margin, fee income, efficiency ratio |
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Composition of bank’s funding sources, on and off balance sheet treatment for securitization |
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Funding stability and liquidity |
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Internal reserves as a source of liquidity and funding |
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Ability to access various funding markets and raise capital from private and public sources |
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Liquidity facilities at central bank |
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Possibility of support from government or private shareholders |
10:30 a.m.
Refreshment Break
10:45 a.m.
Case Study: Assessing Earnings, Profitability and Liquidity
12:00 p.m.
Luncheon and Luncheon Address: Understanding the Changing Regulatory Expectations
Robert RB Lane
President, Lane Risk Consulting
2:00 p.m.
Qualitative Assessment: Stress Testing and Risk Management
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Evaluating an institution’s ability to weather periods of stress |
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Lessons from the government’s stress test |
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Monitoring and controlling exposure |
Case Study: Assessing Portfolio Stress and Risk Management
3:15 p.m.
Refreshment Break
3:30 p.m.
A Conversation about Warning Signals
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Excessive growth, over-concentration, volatile earnings sources, asset and liability mismatches, dependence on unstable funding |
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Symptoms of deteriorating credit standing: financial, non-financial and market indicators |
Developing a Rating: Conclusions and Discussion
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Consolidating multiple analyses to develop a comprehensive assessment of an institution’s creditworthiness |
Day Two concludes at approximately 5:00 p.m. |
