IntroductionCourse IntroductionSimulationSlide 4Banking FundamentalsBanking GoalsBalance SheetIncome StatementAssignment for Next TimeIntroductionCourse IntroductionSyllabus–Course Description–Required Resources–Grading–Tentative ScheduleSimulationStanford Bank Game–Simulated Bank Operation–Management Team ExperienceSimulationConcentration on:–Mechanics: Capital, Cost of Funds, Maximizing Fee Income –Management: People Issues, Time Management and Delegation, “Stick-with-it-ness” and what to do when “you really don’t know” and that’s ok!Banking FundamentalsSPREAD:Investment Return – Cost of FundsInvestment Return mainly from Loans and SecuritiesCost of Funds mainly from Capital and Borrowed FundsBanking GoalsProfitability (Not Size!)–Spread 4% +–ROA 1-1.5%–ROE 12% +Solvency–Capital to Assets 7-8%(No More, No Less)Balance SheetProduction/ FinancialService Firm ServicesASSETS ASSETSCash Small Cash SmallAccts. Rec. Medium Investments MediumInventory Medium Loans LARGEFixed Assets Large Premises SmallLiabs/OE Liabs/OEAccts. Pay. Medium Deposits LargeL/T Debt Large Savings LargeOwner's Eq Large Other Borr’gs MediumCapital TinyIncome StatementProduction/Svc. Financial ServicesSales Total Interest Income- COGS - Total Interest Expense= Gross Margin = Net Interest Income- Optg Exp + Non-Interest Income= EBIT - Non-Interest Expense- Interest Exp - Provision for Loan Losses= EBT = Pre-tax Optg Income- Tax +/- Securities Gains/Losses= Net Income - Income Taxes +/- Extraordinary Items = Net IncomeAssignment for Next TimeGo to Class Webpage (Syllabus)Go to Jan 10th entryClick on, print and bring to
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