1. Financial Statements & Institutions

2. Bank Financial Statements Gup and Kolari: Chp. 3 Statements End Yr. 3 Qtr. 3

3. Financial Institutions Commercial Banks Investment Banks Savings and Loans Credit Unions Insurance Company Mutual Fund

4. Commercial Banks “Accept Deposits and Make Loans” But Also FDIC Insured & Fed Regulated Global/International/Money Center Chase Full Service BankAmerica Retail/Consumer Citizens Limited Purpose / Mono-line Credit Cards, Ag Loans

5. Bank Services Payments Intermediation Other Services Guarantees Insurance Securities Trust Other Fin’l Svcs we will discuss

6. Bank’s Main Activity Maximize Shareholder Wealth By managing Credit, Interest Rate, Liquidity, Operational, Capital and Fraud Risk Subject to constraints from Market Competition, Social structures and Regulatory requirements

7. FDIC Database of Fin’l Stmts. http://www.fdic.gov/bank/statistical/index.html Click on “Institution Directory” Click on “Find Institution” http://www.ncua.gov/IndexCUQuery.htm Click on “Find a Credit Union” http://www.sec.gov/edgar/searchedgar/companysearch.html Click on “SIC” and see relevant SIC codes (starts with 6021) Go back and fill in State and SIC fields.

8. First off…. Let’s understand what we’ve been given before we even think about where we’re going….. Let’s concentrate on the statement in your packet: Yr. 3 Qtr. 3

9. Income Statement Y3Q3 Operating Income3.33.2 Interest income Loans and mortgages94.68691.861 Securities16.51116.160 Federal funds sold.000 Total interest income111.197108.020 Service charge income3.6913.777 Fees and other income23.42223.244 Gross operating income138.310135.041

10. Income Statement Y3Q3 Operating Expenses Salaries and benefits17.46518.127 Interest expenses Interest on deposits60.10755.893 Interest on capital notes.806.821 FRB and fed fund borrowing1.240.408 Total interest paid62.15357.122 Provision for loan losses7.8358.543 Occupancy expense4.9324.789 Business development3.200 Other expenses23.36423.460 Total operating expenses118.949115.240

11. Income Statement Y3Q3 Gross operating income138.310135.041 Total operating expenses118.949115.240 Income before taxes and securities19.36119.801 Applicable taxes6.0546.292 Gain on securities/loans (after taxes of.000 &.000)0.000 Net income13.30713.508 Dividend declared3.6 Increase in equity9.7079.908

12. Balance Sheet Assets3.33.2 Cash and due from banks291.774293.438 Federal funds sold.000 Investment securities Treasury bills77.65231.361 U.S. Government notes408.021437.395 State and muni securities449.970451.389 Total securities935.643920.145

13. Balance Sheet 3.33.2 Loans and mortgages3776.0983726.610 (less provision for loan losses)27.08427.595 Bank premises less depreciation (38.289 & 36.306) 33.05032.059 Other assets8.6038.765 Total assets5018.0834953.422

14. Balance Sheet Liabilities and equities3.33.2 Demand deposits1336.7401350.767 Time deposits3210.2053174.959 Total deposits4546.9454525.726 Federal funds purchased61.34521.743 Funds borrowed from FRB.000 Dividend payable3.600 Accrued taxes7.2777.473 Other liabilities42.56342.651 Total liabilities4661.7294601.192

15. Balance Sheet Capital notes and equity3.33.2 Capital notes34.11534.735 Common stock ($10.00 par30.000 Issued:3.000 & 3.000 million) Surplus48.519 Retained Earnings243.719238.975 Total equity *322.238317.494 Total liability & capital5018.0834953.422 * Total qualifying capital369.896366.027 FRB capital adequacy ratio1.1331.134

16. Analysis #1: Spread Spread = [NII / Assets] * 4 (Roughly) NII = 111.197 – 62.153 = 49.044 ( Net Interest Income = Total Interest Income – Total Interest Expense ) Spread = [49.044 / 5018.083] * 4 = 3.91%

17. Observations about Y3Q3 Gross income up, but expenses up more so overall net was down from Y3Q2. Quick review shows Loans and Securities up, funded by added Deposits and Fed Funds purchased.