1. Stanford Bank Simulation

2. Developments & Trends Capital Adequacy Cost of Funds Hedging
Fee Income
Increasing Lending Risk

3. The Experience Team Oriented Control, manage bank profitability
Make loans using OPM
Watch the spread
Have fun

4. Environment
The economy
Regulatory environment
Marketplace
Competition

5. Mechanisms Product pricing Credit policies Financial structure
Securities transactions
Use of personnel
Advertising and promotion
Premises

6. Initial Decisions Bank name Strategy—wholesale, retail
Management areas
Communications plan

7. Name
Have fun
[name must be approved by the regulator (me)]

8. Strategy Wholesale vs Retail Read the material
Be consistent in decisions

9. Management Areas
Economic forecasting, securities management, gap management
Loan analysis
Liability management – commercial
Liability management – retail
Capital management and income forecasting
Expenses and market analysis

10. Communications Teamwork Meeting methods Meeting times
Decision making process
Read and understand BankSim instructions

11. CAMELS Ratings C - Capital Adequacy A - Asset Quality
M - Mgmt Quality, Mgmt & BofD ability and systems (policies & procedures)
E - Earnings, not just quantity, but
quality, sustainability
L - Liquidity
S - Sensitivity to market fluctuations, Int
rates, FX, Commod prices (thru loans)