|
A
B C D
E F G H
I J K
L M
N O P Q
R S T U
V W X Y Z
A
[top]
Allowance for Loan Losses
A valuation reserve to
provide for possible losses on loans. The reserve is a contra-asset which is
subtracted from total loans to determine the net carrying value of loans for
a bank's statement of condition. Also referred to as reserve for loan &
lease loss.
Asset Quality Risk
The potential loss of cash flows due to poor quality borrowers or
counterparties; low investment grades of securities; or excessive
concentration of similar assets and contracts.
B
[top]
Balance Measure
See Growth Rate - Balance Measure
Balance Sheet Mix
Asset, liability, and equity accounts all stated as a percentage of total
assets on the balance sheet date (EOP).
Book Value
The amount for an item shown on the statement of condition which follows
generally accepted accounting principles (GAAP). In many instances, book
value is the original transaction value, plus or minus any premium,
discount, or other amortization adjustment. For some items, however, GAAP
now requires the use of fair value such as is the case for investment
securities classified as available-for-sale.
Borrowed Funds
Includes all funds acquired from creditors in the form of debt, payable in
less than one year and usually at money market interest rates.
C
[top]
Capital Adequacy
The level of capital funds required to support the institutional structure
and to provide protection against unanticipated and excessive losses. In the
A/L BENCHMARKS Peer Information a balanced growth of loans, assets,
deposits, and capital; acceptable leverage; and risk-based capital of 10% or
better (well capitalized) are indications of adequate capital.
Cash
In the A/L BENCHMARKS Peer Information, cash includes till cash, cash
reserve balances, deposits with other banks, and items in process of
collection.
Charge-offs
Loans which have been written off the books and charged against the
allowance for loan losses.
Commercial Loans
See Loans
Consumer Loans
See Loans
Core Deposits
Includes Noninterest Deposits, NOW and Savings Deposits, and Money Market
Deposits.
Cost of Funds
The cost of funds percentage is total annualized interest expense divided by
total average interest-bearing funds, including deposits and all borrowed
funds.
D
[top]
Deposit Present Value Premium
The amount by which the book value of total deposits exceeds the computed
present value (market value) of total deposits.
For purposes of the A/L BENCHMARKS Peer Information, the present values of
the various deposits were computed using the discounted cash flow method.
The maturity assumptions for non-maturing deposits (decay factors) are
indicated by the duration estimates (IRE) for each deposit classification.
Duration
See Interest Rate Elasticity
E
[top]
Earnings at Risk
See Net Earnings at Risk and Net Interest Earnings at Risk
Equity Value at Risk
The potential adverse change in the present value (market value) of total
equity (MVPE) arising from an assumed change in interest rates.
For the A/L BENCHMARKS Peer Information, the base MVPE is determined by
subtracting the present value (market value) of total liabilities from the
present value (market value) of total assets. Present values for assets and
liabilities are either current quoted market prices or discounted cash flows
using current market rates. The potential adverse impact on present value of
equity is calculated by using a +/-200 basis point change in interest rates;
assuming a parallel shift in the treasury yield curve; and simulating
changes in repricing, prepayments and other rate-driven parameters which
effect the level and timing of cash flows.
G
[top]
Growth Rate
(Annual growth rate) The year-to-year change in the account balance
expressed as a percentage of the prior year�s balance.
Growth Rate - Balance Measure
A measure of the difference between the highest and lowest of four growth
rates (loans, assets, deposits, and equity). The smaller the difference, the
better the balance among the four growth rates.
For example, if all four of the growth rates were exactly 3.76%, then the
difference between the high and low percentage is zero and the growth rates
are in perfect balance. Alternatively, if the four growth rates were 23.5,
18.2, 9.8, and 2.3, the difference between the high and the low percentage
is 21.2.
I
[top]
Interest Margin ($)
See Net Interest Income
Interest Margin (%)
Annualized net interest income on a taxable equivalent basis divided by
average earning assets.
Interest Rate Elasticity
(IRE)
IRE is a measure of interest rate sensitivity. It is the expected percentage
change in the present value (market value) of a financial instrument or
portfolio of financial instruments if market yields increase 100 basis
points.
In addition, IRE can be used to
estimate Macaulay�s duration. Macaulay�s duration is the present value
weighted average time until all the cash flows from a financial instrument
or portfolio will be received or repriced to current market rates. As a
measure of Macaulay�s duration, the IRE percentage is used to express the
number of years to receive or reprice cash flows.
Interest Rate Risk
The potential economic losses due to future interest rate changes. Economic
losses can be reflected as a loss of future net interest income (earnings at
risk); a loss of current fair market values (value at risk); or both.
L
[top]
Liquidity Risk
The potential shortage of cash funds to meet deposit withdrawals, loan
disbursements, or other obligations on a timely basis.
Loan Loss Provision
The expense item on a bank's statement of income that reflects both current
and anticipated loan loss experience (sometimes referred to as provision for
loan loss).
Loans
For the A/L BENCHMARKS Peer Information, loan definitions are consistent
with call report definitions as follows:
- Loans is total loans.
- Total Loans is gross loans and leases without offset by the allowance for
loan losses.
- Net Loans is total loans less the allowance for loan losses.
- Commercial Loans includes commercial loans, foreign loans, agriculture
loans, and lease contracts.
- Consumer Loans includes consumer installment loans, credit cards loans,
and all other consumer loans except real estate loans.
- Real Estate Loans includes commercial, residential, construction,
multi-family, agriculture real estate, home equity, and all other loans
secured by real estate collateral.
M
[top]
Mean
The sum of a group or sample of values divided by the number of observations
in the group or sample.
Median
The value of the middle or center-most item within a group or sample.
MVPE (Market Value of
Portfolio Equity) The
present value (market value) of total assets, less the present value (market
value) of total liabilities.
For purposes of the A/L BENCHMARKS Peer Information, market values of assets
and liabilities are quoted market prices or calculated present values for
all financial instruments. For non-financial instruments, the book or
carrying value is assumed to be market value.
N
[top]
Net Borrowed Funds
Short-term borrowed funds less short-term investments. A negative value
represents net funds sold. When used in the ratio of net borrowed funds to
equity, the average net borrowed funds (either positive or negative) is
divided by average equity.
Net Charge-Offs
Charge-offs less recoveries. When used in the ratio of net charge-offs to
total loans, net charge-offs is divided by average total loans.
Net Earnings at Risk
The potential adverse change in net income arising from a change in interest
rates, measured over a one-year forecast horizon.
For the A/L BENCHMARKS Peer Information, the base net income is computed
using a current or constant forecast of statement of condition balances,
market interest rates, and noninterest items. The potential adverse net
income is calculated by using a +/-200 basis point change in interest rates;
assuming a parallel shift in the treasury yield curve; simulating changes in
repricing, prepayments and other rate-driven parameters which impact cash
flows; and assuming all noninterest items will not change.
Net Interest Earnings at Risk
The potential adverse change in neat interest income arising from a change
in interest rates, measured over a one-year forecast horizon.
For the A/L BENCHMARKS Peer Information, the base net interest income is
computed using a current or constant forecast of statement of condition
balances, market interest rates, and noninterest items. The potential
adverse net interest income is calculated by using a +/-200 basis point
change in interest rates; assuming a parallel shift in the treasury yield
curve; and simulating changes in repricing, prepayments and other
rate-driven parameters which impact cash flows.
Net Interest Income
Interest income from all earning assets less interest expense on all
interest bearing deposits and liabilities. Generally, interest income
includes fees on loans, amortization of premiums on securities, and
accretion of discounts on securities.
Net Overhead
Noninterest expense minus noninterest
income, exclusive of security gains/losses. When expressed as a percentage,
the annualized dollar amount of net overhead is divided by average earning
assets.
Non-Core Funding Dependence %
A measure which shows the relationship between long-term earning assets and
non-core liabilities net of short-term investments. Long-term earning assets
are investment securities which mature beyond one year, other real estate
owned, and net loans reduced by acceptances from other banks and commercial
paper. Non-core liabilities are time CDs and open account time deposits
greater than $100K, other borrowed money, foreign office deposits, brokered
CDs less than $100K, securities sold under agreement to repurchase, federal
funds purchased, and demand notes issued to the U.S. Treasury. Short-term
investments are interest bearing bank balances, federal funds sold,
securities purchased under agreement to resell, debt securities with
remaining maturity less than one year, acceptances from other banks, and
commercial paper.
Non-Performing Assets
Includes non-accruing, renegotiated, and 90-days or more past due loans.
Non-Performing assets also includes other real estate owned and other
foreclosed loan collateral.
O
[top]
Operating Efficiency Ratio
Noninterest expense divided by bank revenue.
For the A/L BENCHMARKS Peer Information, bank revenue is net interest income
(tax equivalized) plus noninterest income, exclusive of security
gains/losses.
P
[top]
Purchased Funds
Includes all short-term borrowed funds plus all large deposits. Purchased
funds are considered highly sensitive to money market interest rates.
R
[top]
Recoveries
Loans recovered which had been written off the books and charged against the
allowance for loan losses.
Reserve for Loan & Lease Loss
See Allowance for Loan Losses
Real Estate Loans
See Loans
Return on Assets
Annualized net income divided by average total assets.
Return on Equity
Annualized net income divided by average total equity.
Risk-Weighted Assets
Those bank assets and off-balance sheet financial instruments which are
included by federal banking regulations in the calculation of risk-based
capital ratios.
S
[top]
Short-Term Non-Core Funding
Dependence % A measure
which shows the relationship between long-term earning assets and short-term
non-core liabilities net of short-term investments.
Long-term earning assets are investment securities which mature beyond one
year, other real estate owned, and net loans reduced by acceptances from
other banks and commercial paper.
Short-term non-core liabilities are the portion of time CDs and open account
time deposits greater than $100K, other borrowed money, foreign office
deposits and brokered CDs less than $100K which mature within one year, plus
securities sold under agreement to repurchase, federal funds purchased, and
demand notes issued to the U.S. Treasury. Short-term investments are
interest bearing bank balances, federal funds sold, securities purchased
under agreement to resell, debt securities with remaining maturity less than
one year, acceptances from other banks, and commercial paper.
Standard Deviation or
Std. Dev. The statistical
measure of variance from the mean representing the dispersion of data
(distance) from the mean.
T
[top]
Tier 1 Risk-based Capital
Tier 1 capital divided by risk-weighted assets. Tier 1 capital consists of
total common equity adjusted for cumulative preferred stock and goodwill.
Total Risk-based Capital
Total capital divided by
risk-weighted assets. Total capital is tier 1 capital plus a defined portion
of the allowance for loan losses, subordinated long-term debt, and
miscellaneous other qualifying equity or near equity items.
Total Loans
See Loans
Treasury Yield Curve
The treasury yield curve represents the relationship of yields on U.S.
Government debt instruments of various maturities at a point in time. The
treasury yield curve, also known as the term structure of interest rates, is
charted daily in The Wall Street Journal and other business publications.
V
[top]
Volatile Liability Dependence %
A measure which shows the relationship between long-term earning assets and
net short-term funds.
Long-term earning assets are investment securities which mature beyond one
year and all loans. Short-term funds are large time deposits, foreign office
deposits, federal funds purchased, securities sold under repurchase
agreements, trading liabilities net of revaluation losses, and other
borrowings maturing within a year. Net short-term funds are net of
short-term investments.
Y
[top]
Yield on Earning Assets
Annualized and taxable equivalent gross interest income on all earning
assets (loans and investments) divided by average earning assets.
A
B C D
E F G H
I J K
L M
N O P Q
R S T U
V W X Y Z
Copyright � 2005 Olson Research Associates,
Inc. - All Rights Reserved |
