Simulation
Teams
Scoring
Targets
Definitions
Analysis (*2x*)
CAMELS
Discussion
Real Bank Data
Embedded Files
Class Discussion
Class Discussion
1) CAMELS consistency?
1) CAMELS consistency?
Overall, as a class, the average CAMELS scores for ranked this way:
1) Earnings
2) Capital
3) Management
4) Asset Quality
5) Sensitivity
6) Liquidity
If you ranked your bank's CAMELS ratings, best to worst, how does your ranking differ from the the class average? What key financial metrics in the simulation reflect the difference best?
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2) Compare & Contrast
2) Compare & Contrast
Identify another team with a similar composite CAMELS rating.
Compare & contrast that bank with your bank. Identify at least 2 or 3 significant characteristics (similar or different); tell us why they are significant.
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3) Biggest Challenge
3) Biggest Challenge
What is your bank's biggest challenge over the next three turns? Are there downsides to addressing the challenge? What are the key financial metrics you'll be concentrating on?
Earnings Call?
Earnings Call?
By now you have managed your bank through several turns. A certain performance profile is likely starting to emerge. You are likely to have grown net income, and also expanded the bank’s balance sheet. What type of bank are you becoming? For example, are you a high risk or low-risk lender? Do you typically make fixed-rate or variable-rate loans? What type of deposits do you generally attract? Are you growing fast or slow? Do you have strong earnings? etc. A common way to share performance information like this is an earnings conference call or “earnings call”.
Earnings calls allow banks to highlight successes during prosperous times and calm fears during adverse ones. The most popular time for companies to conduct these calls is immediately following the release of financial results, typically at the end of each quarter; these are known as quarterly earnings-results conference calls.
The call usually starts off with a person acknowledging that the call will probably contain plenty of "future-looking statements", or predictions about the future of the business (which is always uncertain). By acknowledging future-looking statements, the bank reminds investors not to assume that everything discussed in the call will happen for certain.
Conference call participants usually include the chairman, CEO, CFO and, depending on the bank and the events under discussion, various other executives. These individuals provide an overview of all the major issues that affected the company's performance during the last quarter. Discussions usually also focus on what can be expected from the company in the upcoming periods.
http://www.investopedia.com/ask/answers/04/052104.asp
Your Assignment
Your Assignment
Prepare a short (2 to 2½ minute) earnings call for your bank. Present it to the class. Each team member should participate in the preparation and presentation of the earnings call. In addition to the questions outlined above, here are some other items you might want to include in your presentation (these are in no particular order):
How has the market impacted your performance?
Talk specifically about your bank’s earnings, including margin, yield, cost and ROE
Provide insight into the regulatory view of your bank (capital level, growth mgmt.)
Talk about the bank’s asset quality (impacts of current quality level; what about the future?)
Discuss the bank’s liquidity level? (how is it being used currently; any future plans)?
Discuss current and future investments or borrowing?
Are you borrowing money (instead of funding always via deposits)
What market interest rate environment will adversely impact the bank’s earnings? By how much?
Describe the type of loan business your bank in (quality and fxd/var) Do you have credit quality targets?
Describe your deposit business (checking, time? more or less expensive?)
How do you plan to manage in future periods? Stay the course; or make some changes?
General direction of things? Positive trends? Things to work on? (be specific)
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