Assignment Description:
The objective of the extension assignment for the course is to analyze and evaluate the
financial performance of your institution (or the chosen institution). Using the concepts
and tools of analysis covered in Managing Bank Financial Performance, augmented by
interviews with executives within your bank and your creative thinking, you will address
each of the three areas detailed in the Assignment Content section:
1. Profitability – analyze the “strengths” and “weaknesses” of your bank
2. Risk – assess the financial risks of your bank, trends, and outlook
3. Business Strategy – wrap up the evaluation with a summary of how the
profitability and risk results correlate to the bank’s pursuit of strategic goals.
Format:
Content Page Limit:
10 double-spaced pages of text PLUS appropriate tables and exhibits, maximum
of 8 exhibits:
• 1 ROE exhibit page
• 1 Risk Matrix exhibit page
• Up to 6 additional exhibits to augment the narrative section and referenced
accordingly. Each exhibit is not to exceed one page in length.
Plus (not included in the 10 page limit): Cover page, biographical
summary/certificate of originality page, and references page(s).
Total Pages: maximum of 20 + reference page(s).
Materials and Resources:
Prior to the course each student was provided access to the S&P Global Market
Intelligence (S&P) platform, including an Excel template for ROE evaluation and a KRI
table. These resources will be central to the assignment. In addition to the S&P
resources, students must utilize interviews with at least two key management
personnel within the bank to augment the student’s evaluation. Students are also
encouraged to leverage UBPR and other relevant references to augment their sources.
See the Appendix for formatting and requirements
Expectations:
Students are to approach the assignment like a thesis statement. The assignment
content below follows that format accordingly. The paper will begin with an introduction
establishing the student’s assessment of how profitability and risk correlates to the
bank’s ability to deliver upon business objectives as discussed in detail in the body of
the paper. The body of the paper is where the student’s analyses present evidence of
financial performance in terms of profitability and risk, accompanied by diagnoses of
drivers of the results. The conclusion summarizes key points made in the body of the
paper and provides an outlook as to how the bank’s recent performance and business
model will deliver optimized results going forward.
Assignment Content:
1. (10%) Executive Summary, limit 1 page: This summary should convey to the
reader the relative size of the bank (assets, branches, markets, etc.) and provide
key historical events shaping the bank to date (origin, growth, acquisitions,
market expansion, etc.). Present the key points that will be made regarding the
financial performance of the bank, establish the outline of the analyses that
follow, and describe the bank’s business goals.
2. (35%) Profitability, limit 4 pages: Evaluate the relative profitability of your
bank for the year 2021, comparing your bank to the associated peer group.
Identify, explain, and analyze the key profitability “strengths” and “weaknesses.”
Based upon your understanding of the bank’s strategies and trends in the key
measures, assess whether the variances are truly “strengths” or “weaknesses”
Where appropriate, discuss compensating factors that offset the variance or
deem it within acceptable management range.
Prescribed approach:
A. Present an overview and evaluation of your bank’s profitability, including
areas of focus based upon bank strategy
B. Evaluate specific key strengths in profitability, underlying drivers,
correlated risk metrics, and considerations to ensure continued
performance
C. Evaluate specific key weaknesses in profitability, underlying drivers,
correlated risk metrics, and opportunities to enhance performance
D. Present and support any arguments where negative performance in
profitability metrics relative to peers is deemed acceptable to management
3. (35%) Risk Management, limit 4 pages: Develop a risk KRI matrix using the
CAMELS framework summarizing your bank’s risks for 2021, trends in KRIs, and
your assessment of the outlook for each. Based upon your understanding of the
bank’s strategies and risk appetite, evaluate the overall risk of the bank and key
areas of focus within the ERM program.
Prescribed approach:
A. Present an overview of your bank’s enterprise risk using the KRI matrix,
establishing the components of CAMELS key to the evaluations to follow
B. Evaluate specific low risk categories, underlying drivers, and their
tradeoffs in profitability
C. Evaluate specific high-risk categories and any compensating strengths in
performance and/or business strategy that compensate for heightened risk
D. Present and support any arguments where elevated risk is deemed
acceptable within the bank’s Enterprise Risk Management framework
4. (10%) Business Strategy & Conclusion, limit 1 page: Summarize the bank’s
key business strategy as you understand it through your presented evaluation of
profitability and risk, supplemented by insights gleaned from management
interviews and other relevant sources (like published SEC reporting from public
bank holding company parents of the bank, for example). Link the business
strategy to salient metrics highlighted in the preceding sections, reinforcing the
correlation between strategy and results. Using the expertise attained from the
evaluation of the bank, provide a recommendation for steps to be taken to
sustain or improve performance.
5. In order to earn a grade of Excellent, papers must be excellent in writing quality
as well as content. Writing quality includes proper use of the English language in
structuring sentences, punctuation, grammar, spelling, organization and flow of
the material presented. Writing quality represents 10% of the grade.
Requirements, Format, Reminders and Other Housekeeping
I. All exhibits must be referenced in the text. Remember, in addition to the two
standard items – ROE worksheet and KRI matrix, there is a limit of 6 exhibits.
Use them prudently for impact within the section to which they apply. It is
recommended that students place all exhibits at the end of each relevant section
and reference them in the written portion of the report.
II. It is required that you interview at least two members of the management team of
the bank. Executives and senior managers with sufficient authority to impact key
business decisions are appropriate. These interviews should occur after you have drafted your analyses of profitability and risk to provide context and added
insight into management’s view of the results. The insights gathered from the
interviews are to be reported judiciously as support for and not in place of your
evaluation.
III. You need to cite all sources used in preparing your assignment – including
interviews, S&P Global Market Intelligence, UBPR, bank annual report(s) or other
documents. A reference page is to be included at the end of the report. These
pages do not count against the total page limit of 20. See the PCBS Extension
Manual for instructions on citing sources.
IV. It is acceptable to work in groups to discuss data and jointly interview key
management personnel, but you must write your own report.
V. The final 10% of the grade will be based upon writing the quality and visual
appeal of the report. Writing quality includes proper use of language, sentence
structure, punctuation, grammar, spelling, organization and flow of the material.
Visual appeal will be judged by the ease of reading the report and care taken in
developing exhibits.
