Analytical Tools - Use of Financial Statement Analytical Procedures (APs) Designed to Focus on Bank Areas of Concern

Bank financial statements can be overwhelming. This 90-minute bank financial statement analysis training shows how analytical procedures help directors, auditors, regulators and others find unusual transactions, events, accounting or business changes and misstatements.

It covers historical trend analysis using dollar, percentage and common-size analysis of the balance sheet and income statement. You'll then work through profitability, capital, asset quality, liquidity and productivity ratios, from return on average assets and net interest margin to net charge-offs and the efficiency ratio, with calculations and interpretation.

The session also covers actual vs. forecast comparisons, statement interrelationships and industry statistics. Two related tools, the UBHCPR and key indicators, are covered in other webinars.

• Explain key financial statement ratios used by bank analysts
• Use analytical tools to detect unusual or unexpected changes
• Compare basic and common-size financial statements
• Distinguish dollar analysis from percentage analysis
• Interpret profitability, capital, asset quality, liquidity and productivity ratios
• Calculate the ratios and explain what they mean

Historical trend analysis

• Dollar analysis
• Percentage analysis
• Common-size balance sheet and income statement analysis

Ratio analysis

• Profitability ratios: return on average assets and equity, EPS growth, interest ROA, interest income and expense ratios, net interest margin, non-interest ROA and overhead burden
• Capital ratios: capital adequacy, regulatory capital, asset leverage and internal capital generation rate
• Asset quality ratios: asset quality, net charge-offs, non-performing ratio and non-performing assets reserved
• Liquidity ratios: loan to deposit, jumbo deposit, loans to earning assets and short-term investment ratios
• Productivity ratios: non-interest expense, revenue per employee, efficiency and overall efficiency ratios

Calculations and comparisons

• Calculating and interpreting key metrics such as average equity to average assets, primary capital, reserve for loan losses to loans, and liquidity, loan, leverage and expense ratios
• Comparing actual and forecast results
• Analyzing financial statement interrelationships and industry statistics
• Computational examples and what the analysis means

Reviewers need to turn large amounts of data into focused, usable insight that highlights unexpected changes. These simple ratios and comparisons give you that focus, and the techniques can be used right away by anyone who reviews bank financial statements.

This session suits financial analysts, directors, managers, bank officers, controllers, treasurers, internal and external auditors, compliance officers, risk managers, general counsel, regulators and investors.

The targeted audience for such a webinar are the senior people at the bank:

• Directors
• Management
• Officers - Controllers, Treasurers, etc
• General Auditor - Internal
• Compliance Officer
• Risk Manager
• General Counsel
• External Auditor
• Primary Regulator
• Financial Analysts
• Internal Auditing Personnel

Paul J. Sanchez, CPA, CBA, CFSA, CGMA conducts a small CPA practice in Port Washington, New York. He is also the owner of Professional Service Associates (PSA), a consulting and professional training and development business servicing corporate clients (auditors, controllers, etc.), CPA firms, professional associations and others. He was an assistant professor at Long Island University - C.W. Post Campus as well as an adjunct lecturer at City University of New York. Prior to starting PSA, he was the Vice President-Professional Development for the Audit Division of a regional bank and Director of Professional Practices and Vice President of a money-center bank, where he directed the professional practice development and training for internal auditors. He also was on the technical staff of the Auditing Standards and Examinations Divisions of the AICPA. He practiced public accounting in the New York office of Deloitte where he also was a firm recruiter and in-house professional development instructor. He was an owner and auditing and accounting seminar leader for the Person/Wolinsky CPA Review Courses, a company that prepared candidates to pass the Uniform CPA Examination. He is a frequent lecturer and seminar leader for accounting, auditing, banking, risk assessment and other professional presentations. He is the author of the textbook, “Accounting Basics for Community Financial Institutions” (Financial Managers Society, 2nd edition, Chicago, 2009) and the “Ideas an Analysis Letter: The Sanchez Take” (see www.sanchez-psa.com). As a contributing author, his chapter on ‘An Auditor’s Approach to Risk-Based Auditing: What to Audit and When,’ is included in the textbook, “Effective Auditing for Corporates: Key Developments in Practice and Procedures,” (Bloomsbury Information, Ltd, London, 2012).