Calculate the dollar and duration gapBased on findings in the two points above, what are your expectations
Fantastic news! We've Found the answer you've been seeking!
Question:
Calculate the dollar and duration gapBased on findings in the two points above, what are your expectations for future performance (not detailed financial projections? just your assessment as to whether the bank is expected to grow or decline, or be taken over by another bank)
Transcribed Image Text:
Financial Highlights In the Consolidated Statement of Income, amounts related to certain asset and liability management (ALM) activities have been reclassified from other income to market making and similar activities, which was previously referred to as trading account income. All prior periods presented reflect this change, which has no impact on the Corporation's total noninterest income or net income, and has no impact on business segment results. For more information, see Note 1 - Summary of Significant Accounting Principles to the Consolidated Financial Statements. Table 1 Summary Income Statement and Selected Financial Data cpp) Income statement Net interestin Ninterest inco Totalrent of interest exper Provision for creat losses Nonirboreat euporne Income before income tax Income tax exper Net Incom Preferred stock dividends Net income applicable to come sharehekers Per common shere information Earnings Diktedings Dividend pa Performance ratio Retaman average assets Reta on average common shareholders equity Return on average tangible common shareholders' equity ( Efficiency natio Balonce sheet a year end Total loan and Total s Total deposits Total Babies $ 3 5 $ 48,891 $ 42,353 91,244 3,990 54,900 32,754 5,324 27,430 1,432 25,999 3 1.77 $ 2.75 1.14% 10.62 14.56 66.17 2,434,079 1,434,803 2,169,269 3 241,409 264,810 2018 48,162 42,958 91,020 3,282 53154 34,554 4,-437 24,1-47 1,451 26,696 264 2.61 0.54 1.21% 11.04 15.55 56:40 946,895 2.354,907 1,381,476 2.099,182 Total common shareholders equity Total shareholder sty 242,999 26,325 Return on average tangible common shareholders' equity is a non-GAAP francial measure. For more information and a componding reconciliation to the most closely related financial measures defined by accounting principles generally accepted in the United States of America, see Non-GAAP Reconciliations on page the Financial Highlights and Business Segment Operations sections in the MD&A of the Corporation's 2018 Annual Report on Form 10-K. Net Interest Income Net interest income increased $729 million to $48.9 billion in 2019 compared 2018. Net interest yield on a fully taxable-equivalent (FTE) basis decreased two basis points (bps) to 2.43 percent for 2019. The increase in net interest income was primarily driven by loan and deposit growth, partially offset by lower long-end rates. Assuming a stable economic and interest rate environment compared to December 31, 2019, we expect quarterly net interest income for the first two quarters of 2020 to be lower compared to the fourth quarter of 2019 driven by the impact of rates and one fewer day of interest accruals. Quarterly net interest income is expected to rise modestly in the second half of 2020 due to one additional day of interest accruals and expected loan and deposit growth. For more information on net interest yield and the FTE basis, see Supplemental Financial Data on page 27, and for more information on interest rate risk management, see Interest Rate Risk Management for the Banking Book on page 74. Noninterest Income Table 2 Noninterest Income (B) Fees and con Service charges Investment and brokerage services Intet banking fem Total for and commissiona Markat making and Other income $ 2019 5,397 $ 7,674 13,902 5,642 33,015 1,004 304 42,363 3 2018 5824 7,767 14160 5,327 31,078 1,005 772 42,858 Totalnoninterest income Noninterest income decreased $505 million to $42.4 billion in 2019 compared to 2018. The following highlights the significant changes. * Service charges decreased $93 million primarily driven by lower fees due to policy changes in 2018 and lower ATM volume in Consumer Banking. * Investment and brokerage services income decreased $258 million primarily due to lower transactional revenue and a decrease in assets under management (AUM) pricing, partially offset by the positive impact of AUM flows and higher market valuations. • Investment banking fees increased $315 million due to increases in advisory fees and equity and debt underwriting fees. Other income decreased $468 million primarily due to lower gains Financial Highlights In the Consolidated Statement of Income, amounts related to certain asset and liability management (ALM) activities have been reclassified from other income to market making and similar activities, which was previously referred to as trading account income. All prior periods presented reflect this change, which has no impact on the Corporation's total noninterest income or net income, and has no impact on business segment results. For more information, see Note 1 - Summary of Significant Accounting Principles to the Consolidated Financial Statements. Table 1 Summary Income Statement and Selected Financial Data cpp) Income statement Net interestin Ninterest inco Totalrent of interest exper Provision for creat losses Nonirboreat euporne Income before income tax Income tax exper Net Incom Preferred stock dividends Net income applicable to come sharehekers Per common shere information Earnings Diktedings Dividend pa Performance ratio Retaman average assets Reta on average common shareholders equity Return on average tangible common shareholders' equity ( Efficiency natio Balonce sheet a year end Total loan and Total s Total deposits Total Babies $ 3 5 $ 48,891 $ 42,353 91,244 3,990 54,900 32,754 5,324 27,430 1,432 25,999 3 1.77 $ 2.75 1.14% 10.62 14.56 66.17 2,434,079 1,434,803 2,169,269 3 241,409 264,810 2018 48,162 42,958 91,020 3,282 53154 34,554 4,-437 24,1-47 1,451 26,696 264 2.61 0.54 1.21% 11.04 15.55 56:40 946,895 2.354,907 1,381,476 2.099,182 Total common shareholders equity Total shareholder sty 242,999 26,325 Return on average tangible common shareholders' equity is a non-GAAP francial measure. For more information and a componding reconciliation to the most closely related financial measures defined by accounting principles generally accepted in the United States of America, see Non-GAAP Reconciliations on page the Financial Highlights and Business Segment Operations sections in the MD&A of the Corporation's 2018 Annual Report on Form 10-K. Net Interest Income Net interest income increased $729 million to $48.9 billion in 2019 compared 2018. Net interest yield on a fully taxable-equivalent (FTE) basis decreased two basis points (bps) to 2.43 percent for 2019. The increase in net interest income was primarily driven by loan and deposit growth, partially offset by lower long-end rates. Assuming a stable economic and interest rate environment compared to December 31, 2019, we expect quarterly net interest income for the first two quarters of 2020 to be lower compared to the fourth quarter of 2019 driven by the impact of rates and one fewer day of interest accruals. Quarterly net interest income is expected to rise modestly in the second half of 2020 due to one additional day of interest accruals and expected loan and deposit growth. For more information on net interest yield and the FTE basis, see Supplemental Financial Data on page 27, and for more information on interest rate risk management, see Interest Rate Risk Management for the Banking Book on page 74. Noninterest Income Table 2 Noninterest Income (B) Fees and con Service charges Investment and brokerage services Intet banking fem Total for and commissiona Markat making and Other income $ 2019 5,397 $ 7,674 13,902 5,642 33,015 1,004 304 42,363 3 2018 5824 7,767 14160 5,327 31,078 1,005 772 42,858 Totalnoninterest income Noninterest income decreased $505 million to $42.4 billion in 2019 compared to 2018. The following highlights the significant changes. * Service charges decreased $93 million primarily driven by lower fees due to policy changes in 2018 and lower ATM volume in Consumer Banking. * Investment and brokerage services income decreased $258 million primarily due to lower transactional revenue and a decrease in assets under management (AUM) pricing, partially offset by the positive impact of AUM flows and higher market valuations. • Investment banking fees increased $315 million due to increases in advisory fees and equity and debt underwriting fees. Other income decreased $468 million primarily due to lower gains
Expert Answer:
Answer rating: 100% (QA)
Ans Duration gap analysis indicates the potential change in a banks net interest income You can find ... View the full answer
Related Book For
Bank Management and Financial Services
ISBN: 978-0078034671
9th edition
Authors: Peter Rose, Sylvia Hudgins
Posted Date:
Students also viewed these accounting questions
-
Ace Co. is to be taken over by Beta Ltd. at the end of year 2007. Beta agrees to pay the share holders of Ace the book value per share at the time of the takeover. A reliable analyst makes the...
-
The research paper needs to be on performance appraisals. I need the research to be from 7-9 scholarly sources. Please do not spend a large percentage on the paper defining the topic rather, define...
-
Future Plans Paper This paper needs to be a minimum of 2 pages 1 Explain what your plans for the future were for your career before this classbusiness concept 2 Have your plans changed after taking...
-
In Fig. P2.72 gate AB is circular. Find the moment of the hydrostatic force on this gate about axis A. Neglect atmospheric pressure.
-
On the Motorola 68020 microprocessor, a cache access takes two clock cycles. Data access from main memory over the bus to the processor takes three clock cycles in the case of no wait state...
-
Pipes AB and CF in Figure P3.12.5 have a diameter of 3 m and a Darcy-Weisbach friction factor of 0.02. The length of AB is 1000 m and that of CF is 900 m. The discharge in pipe AB is 60 m3/sec....
-
What is the role of HR professionals in information security and privacy management?
-
Which of the following phenomena would be either consistent with or a violation of the efficient market hypothesis? Explain briefly. a. Nearly half of all professionally managed mutual funds are able...
-
1. (2 points) Create a database called: University Town 2. (4 points) Create 4 tables called: a) Students b) Professors c) Courses d) Fees 3. (2 points) Insert 10 records in each table. 4. (4 points)...
-
Overview The milestone for Project One involves applying accounting principles and methods to long-term liabilities and equity. You will also evaluate these financial statement components for...
-
In order to ensure that a firm is implementing the triple-bottom-line approach successfully, managers must Blank______. Multiple choice question. audit the company's results in fulfilling its social...
-
Identify two leadership or behavioral theories that were discussed by Bolman and Deal as relating to the human resource frame. Then cite and summarize for each identified theory one or more research...
-
Luke purchased a 180-day $500, 000 bank bill on 1 January 2019 at a yield rate of 3.18% p.a. (simple interest rate). He sold this bank bill on 15 April 2019 at a yield rate of 3.06% p.a. (simple...
-
PS.52 The Station, a boutique cookie company, needs to create a production process for its new cinnamon malt ball cookies. To help accomplish this, the company has put together some numbers for...
-
What is the impact of technology on social interactions and communication ?
-
Levi Strauss debuted their Type 1 Jeans in the early 2000s, with oversized rivets, buttons, and stitches. Levi's was forced to abandon this failure after the firm released a Super Bowl advertisement...
-
Tax Drill - Compute Realized Gain or Loss Luana sells Beta Corporation stock with an adjusted basis of $58,000 and a fair market value of $64,000. Luana has a realized loss of $ 6,000?
-
Annual dividends of ATTA Corp grew from $0.96 in 2005 to $1.76 in 2017. What was the annual growth rate?
-
What are self-service terminals and what advantages do they have for financial institutions and their customers?
-
Of what benefit is agency theory in helping us understand the consequences of changing control of a financial-services firm? How can control by management as opposed to control by stockholders affect...
-
First State Security Bank is planning to set up its own Web page to advertise its location and services on the Internet and to offer customers selected service options, such as paying recurring...
-
If you let go of a helium balloon, it quickly rises. As it rises, the balloon gets larger and larger until it pops. Why does the balloon expand as it rises?
-
Elephant seals do deep dives to forage for food. The energy used by the seals in diving depends on their body composition; for example, fatter seals use less energy to swim to the surface at the end...
-
Early airshipscraft that relied on large volumes of low density gas to rise from the groundwere filled with hydrogen, but safety concerns necessitated a switch to helium. When an airship made the...
Study smarter with the SolutionInn App