1. Join OSIG! (Contact Prof. Yang) Limited competitive positions available beginning of Spring Term 2008. Year long commitment, can take up to 2 credits/term. The deadline for application is April 4. Interviews will be held on the 5th and 6th of April. Become an equities analyst for a nationally recognized value strategy investment team and Manage real $ portfolios. (2007 +24% Annualized Return) Trips to NYC, RISE conference, and Portland investment Firms Increase your opportunities for employment, and add to your knowledge of Finance, economics, accounting, and marketing Management and leadership opportunities.

2. Financial Statements & Institutions

3. Bank Financial Statements Gup and Kolari: Chp. 3 Statements End Yr. 1 Qtr. 4

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

5. 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

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

7. 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

8. 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.

9. 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. 1 Qtr. 4

10. Income Statement Y1Q4 Operating Income1.41.3 Interest income Loans and mortgages87.52985.224 Securities18.51115.199 Federal funds sold.0001.648 Total interest income106.040102.071 Service charge income4.6194.410 Fees and other income21.22421.058 Gross operating income131.882127.538

11. Income Statement Y3Q3 Operating Expenses Salaries and benefits16.77716.473 Interest expenses Interest on deposits56.84954.249 Interest on capital notes.909.923 FRB and fed fund borrowing1.147.000 Total interest paid58.90555.173 Provision for loan losses7.2797.224 Occupancy expense4.0443.937 Business development3.1003.000 Other expenses22.50322.188 Total operating expenses112.608107.994

12. Income Statement Y3Q3 Gross operating income131.882127.538 Total operating expenses112.608107.994 Income before taxes and securities19.27419.545 Applicable taxes6.2686.794 Gain on securities/loans (after taxes of.000 &.000).3781.573 Net income13.38414.324 Dividend declared3.300 Increase in equity10.08411.024

13. Balance Sheet Assets1.41.3 Cash and due from banks359.254375.696 Federal funds sold.00088.776 Investment securities Treasury bills260.000204.345 U.S. Government notes384.892320.024 State and muni securities406.290356.099 Total securities1051.182880.468

14. Balance Sheet 1.41.3 Loans and mortgages3472.5573444.479 (less provision for loan losses) 22.95122.683 Bank premises less depreciation (26.030 & 24.559) 26.92126.185 Other assets10.45710.770 Total assets4897.4194803.693

15. Balance Sheet Liabilities and equities1.41.3 Demand deposits1551.7051588.917 Time deposits2951.7982883.289 Total deposits4503.5034472.206 Federal funds purchased54.933.000 Funds borrowed from FRB.000 Dividend payable3.300 Accrued taxes7.7919.399 Other liabilities39.57039.440 Total liabilities4609.0974524.345

16. Balance Sheet Capital notes and equity1.41.3 Capital notes38.45739.077 Common stock ($10.00 par Issued:3.000 & 3.000 million)30.000 Surplus48.519 Retained Earnings171.346161.752 Total equity *249.865240.271 Total liability & capital4897.4194803.693 * Total qualifying capital299.797290.689 FRB capital adequacy ratio.967.941

17. Analysis #1: Spread Spread = [NII / Assets] * 4 (Roughly) NII = 106.040 – 58.905 = 47.135 ( Net Interest Income = Total Interest Income – Total Interest Expense ) Spread = [47.135 / 4897.419] * 4 = 3.85%

18. Observations about Y1Q4 Gross income up, but expenses up slightly more, so overall net was down from Y1Q3. Quick review shows: Securities up more than Loans up. Funding from added Deposits and loans from other banks (Fed Funds Purch’d).