Finance Management

CASE STUDY INSTRUCTIONS

The following articulates the overall basic procedure and presentation details for all three cases for the semester; each case will be laid out the same way.

PURPOSE

The purpose behind these studies is: (1) help you develop a strong awareness of the financial structure of depository financial institutions, insurance companies, and investment banks and investment companies, respectively; (2) further your financial analysis skills; and (3) broaden your understanding of the risks and strengths inherent in the important financial institutions in the United States.

PROCEDURE

There will be a total of three case studies, assigned separately, to wit – a randomly assigned bank, insurance company, and investment company. It is your task to analyze the financial structure of each company provided. Analysis consists of both narrative and Excel analysis. When submitted, it should contain, as a minimum, the following:

Contents:

• Identifying Data – This is a cover page (see attached format)

• Narrative –

  • A brief summary of your data analysis findings, bullet format permitted UNLESS YOU FEEL A MORE DETAILED NARRATIVE IS NECESSARY.

  • A SUMMARY OF YOUR ANALYSIS OF THE FINANCIAL INSTITUTION’S SOUNDNESS. This section may employ comparative, general financial institution data and would be best NOT in bullet format.

• Excel Spreadsheet – 2 years of data to be obtained from SEC/Edgar and/or FDIC.gov since these are the primary sources for financial data. In other words, don’t necessarily trust Yahoo! Finance or MSN Money.

  • Calculate the Financial Institution’s:

    • ROE and ROA

    • Equity Multiplier

    • Profit Margin (net income/total operating income), plus these detailed sub-ratios: interest income/total operating income, provision for loan loss/total operating income, non-interest expense/total operating income, and income taxes/total operating income (for banks)

    • Asset Utilization (total operating income/total assets), plus these sub-ratios: interest income/total assets and non-interest income/total assets (for banks).

You are free to use other ratios and analysis techniques (i.e., DuPont Analysis) but only if you feel they are important in making a point in either your analysis or conclusions. Don’t add them just to impress me; I won’t be impressed.

Maximum narrative length: 2 pages plus cover page and Excel file.

Use cover page template, below (don’t get creative here. I want the cover EXACTLY as shown – with your info obviously):

NAME OF INSTITUTION (Symbol)

Headquarters Address

Sector (i.e. Regional Bank, Midwest, Super-Regional Bank, or Money Center Bank)

Market Capitalization

Total Assets

Profile (brief as reasonably possible) – you may use Yahoo! Finance, MSN Money, Morningstar or other source including the institution’s webpage.

Your Name