Crypto Banking- Blockchain banking -Understanding Banking

SAN FRANCISCO - May 15, 2018 - PRLog -- There are multitudes of issues to work on while analyzing a bank. They can be broken down to Asset Quality, Liquidity, Earnings, Capital, Sensitivity to Market Risk, Management.

Asset Quality

Distribution and Severity of Classified Assets. Substandard, Doubtful, or Loss. Asset Quality of adversely classified assets, nonaccruals, and concentration of risk inherent in the loan portfolio.

1- Level of nonaccrual loans to total loans

2- ALLL ( Allowances for loan and Lease losses)

3- Volume and Nature of special mention classification

4- Past Due and Nonaccrual loans to total loans

5- Lending policies and credit administration procedures

6- Asset Class and its concentration within an industry or segment

Liquidity

1- Volatility of deposits

2- Frequency and level of borrowing

3- Technical competence relative to structure of liabilities

4- Availability of assets readily convertible to cash.

5- Access to money markets or other ready source of funds

6- Overall effectiveness of asset liability management strategies

7- Net loans and leases to deposits and net non core dependence ratios

Earnings

1- Ability o cover losses and provide adequate capital

2- Earning trends, and the quality and composition of net income

3- Reliance on interest sensitive funds

4- Adequacy of provisions to the ALLL

5- Net Income to Average Assets

6- Net Interest income to Average Assets. Net Interest Income can be adversely affected by increasing level non-accrual loans, loan modifications, declining yields on loans and higher cost of funds

7- Overhead Expense to Average Assets

8- Provisions to Average Assets

Capital

1- Class of Assets and its concentration within a business or segment

2- Exposure to market conditions and its concentration.

3- Volume of Severity of risk assets

4- Growth Experience and plans

5- Earning retention

6- Tier 1 Leverage capital to Average Total Assets

7- Tier 1 risk based capital

8- Total risk based capital

Sensitivity to Market Risk

1- Changes in social, economic and political condition

2- Sensitivity of earnings or the economic value of its capital to the adverse changes in interest rates

3- Ability of management to identify, measure, monitors, and control exposure to market risks

4- Nature and complexity of interest rate risk exposure arising from non trading positions

Management

1- Education and experience

2- Technical competence.

3- Leadership and administrative ability

4- Compliance with banking regulation and statutes

5- Adequacy and compliance with internal policies

6- Depth and succession

7- Ability to plan and respond to changing circumstances

8- Quality of internal controls and operating procedures

Robin Trehan B.A, MIB, MBA can be contacted at www.keyfunds.com or www.businesscreditfunding.com