A Separate Peace and the Madness of Jealousy Similarities free essay sample

The frenzy of Jealousy Shakespearean statement never squander Jealousy on a genuine man: It Is the Imaginary man that supplements every one of us In the since quite a while ago run identifies with A Separate harmony since it identifies with Genes Jealousy towards Finny. Finny was an athletic individual that won a ton of trophies and contended in numerous occasions yet additionally needed to be shrewd like quality however never needed to show that Jealousy dissimilar to Gene who is the savvy, ordinary individual and a run of the mill adolescent at Devon, yet his desire over finny covers his brain and he even pushes finny out of tree and closures his athletic career.Gene and Finny represent something. Quality represents war in spite of the fact that Finny represents harmony and inclinations. The Jealousy of a man can make him do some terrible things. Envy is a solid word that implies the hatred against another achievement and it is utilized by Gene, who is a savvy, run of the mill young person at Devon, and his Jealousy for Fannys athletic capacities that helped him win a great deal of trophies and his notoriety. We will compose a custom article test on A Separate Peace and the Madness of Jealousy: Similarities or on the other hand any comparable subject explicitly for you Don't WasteYour Time Recruit WRITER Just 13.90/page Despite the fact that the two of them might be the best of companions and make a decent group their updates continues diminishing due to the absence of Genes believe that Gene carries.Genes Jealousy for Finny continues extending and blurring his Judgment since he imagines that Finny Is attempting to disrupt his scholarly vocation. Likewise Genes foreboding shadow of desire couldn't contact Fannys haze of inclinations and of his shinning splendid light. Despite the fact that he knows Finny isn't Jealous of his scholastics however rather appreciates them yet Genes development of Jealousy makes his psyche arrive at its breaking point which makes him push finny out of a tree and end his athletic vocation and his rarer In the military like the statement says, Gene purposely thumps Finny out of a tree. Significantly after this Incident both of them were still companions for quite a while. Another Jealousy is Leper Leveler. Untouchable Leveler, a cohort of Gene and Fannys and a mellow delicate kid from Vermont who venerates nature and takes part in tranquil outside arranged leisure activities, is Jealous of finny for being Genes closest companions. He believes he ought to be Genes closest companion and is Jealous of Phonies. The Jealousy of a man can make him do some horrible things.Shakespearean tote never squander Jealousy on a genuine man: It Is the Imaginary man that supplements every one of us In the since a long time ago run identifies with A Separate harmony since It identifies with Genes envy towards Finny. Finny was an athletic individual that won a ton of trophies and contended in numerous occasions yet additionally needed to be brilliant like quality yet never needed to show that Jealousy not at all like Gene who is the savvy, ordinary individual and a normal young person at Devon, however his Jealousy over finny covers his brain and he even pushes finny out of tree and finishes his athletic career.Gene and Finny represent something. Quality represents war despite the fact that Finny represents harmony and inclinations. Envy Is a Gene, who is a keen, run of the mill adolescent at Devon, and his Jealousy for Fannys athletic capacities that helped him gain a great deal of trophies and his fame. Despite the fact that the two of them might be the best of companions and make a decent group their kinship continues diminishing as a result of the absence of Genes believe that Gene conveys. Qualities Jealousy for Finny continues growing and blurring his Judgment since he believes that Finny is ring to disrupt his scholarly career.Also Genes foreboding shadow of Jealousy couldn't contact Fannys haze of inclinations and of his shinning splendid light. Despite the fact that he knows Finny isn't Jealous of his scholastics yet rather appreciates them however Genes development of Jealousy makes his brain arrive at its breaking point which makes him push finny out of a tree and end his athletic vocation and his profession in the military. Much after this episode both of them were still companions for quite a while.

Complete work Essay Example | Topics and Well Written Essays - 750 words

Complete work - Essay Example For the couple of ladies who claimed organizations, and were hitched â€Å"in manu† (which means their spouses were in charge of them), the man of the hour along with his family was responsible for all the woman’s assets. This law kept ladies from claiming anything they earned with the consideration of her legacy and settlement (Kidner, 2014). Ladies nearly had nothing to do with the ‘manus’ marriage and what the spouse said was the final word on all the issues. I accept that if the ladies were allowed the chance to possess property in the manus marriage, their families would have profited more, as there would be two suppliers. In legislative issues, ladies couldn't bolster their spouses in protection and not in the general population. Their open job was to take care of the customary exercises of family unit tasks. At home they could weave, turn yarn so as to make garments for their families (Kidner, 2014). In the event that ladies had a state in government al issues and even took an interest in things like democratic, the greater part of the realm issues would be unbelievable and the domain administered in a vastly improved manner. Ladies were additionally made to believe that their job was to sit beautiful at home, support their youngsters and notice to their significant other's choices. In contrast to the present society, fathers picked spouses for their little girls and young ladies got hitched at the lawful age of 12 years (Kidner, 2014). Fathers permitting their girls to happen to age and afterward get hitched to their preferred men would have brought about diminishing the quantity of separations just as sexual indiscrimination. The male strength in the Roman Empire was an extraordinary impact on how ladies drove their lives. The men were the determinants of what was positive or negative for the ladies. They smothered the voice of the ladies who just had a choice of doing what their spouses or fathers requested from them. Their f eelings didn't make a difference and accordingly were not the slightest bit an impact to the social standards nor the political characteristics in the realm. This didn't stop the ladies yet they raised high over the standards and laws and figured out how to change their reality. This powerful paper shows how ladies changed a portion of the social variables of the Roman Empire. Ladies in the Roman Empire might not have had any political office or any democratic rights however made incredible commitments in religion. They did this in the midst of the way that they couldn't represent their privileges. Ladies consistently needed to serve under a male figure, be it a spouse or a dad. Men commanded in the social field and governmental issues however interestingly, they were not an extraordinary effect on religion. As it was standard, the ladies dealt with the homestead’s hallowed places, special raised areas, and offering every day petitions. They would play out the vital ceremonie s to keep the family divine beings mollified. The Romans accepted that these divine beings, when ladies conciliated them, would live in agreement with the family. The pacified spirits would shield the home and family from any mischief thus the ladies needed to focus on how well they kept the divine beings. Nonetheless, this changed after some time as ladies became goddesses and there are coins present in the realm that have pictures of these goddesses. Helena was the lady who saw it that Christianity was the establishment of the Roman Empire (Winter, 2003). The hawkish male society clarified that solitary guys would survey instruction. Ladies, according to

Account Manager Resume Examples, Template, and Resume Tips

Account Manager Resume Examples, Template, and Resume Tips Over the past decade, there has been a steadily rising demand for account managers. Today, almost every company that deals with large clients employs account managers.For those not in the know, an account managers is a person who acts as a liaison between a company’s key clients and the company’s departments.The account manager is responsible for ensuring good client relationships by acting as a one-stop service for clients, while at the same time pursuing the company’s interests.It is the task of the account manager to form relationships with new clients and maintain existing relationships. Account managers also work in collaboration with the sales team to ensure sales targets are met.Despite the ever-increasing demand for account managers, there is a lot of competition for account manager positions.In 2016, the position of account manager was the most popular job for graduates, according to Forbes, with graduates earning a median salary of $50,000.Other major job sites also p eg the salary for account managers at over $50,000, with Indeed quoting the average base salary for account managers in 2020 at $61,062 annually, Glassdoor at $62,263 per year, and PayScale at $53,741 per year.With the relatively high levels of competition for account manager positions, you want to make sure that every aspect of your job search is designed to give you an advantage over your competition, and this starts with making sure that you have an optimized account manager resume.Remember, regardless of how qualified, skilled or experienced you are, if your resume is whack, you won’t be getting invited to the job interview or getting that job.Your resume is the first impression your prospective employer will have of you, and therefore you need to make sure that it proves to the employer that you are the best suited person to handle their accounts.Your resume needs to show your proficiency in duties like identifying business opportunities, interacting with stakeholders, commun icating customer requirements to various teams, ensuring that solutions are delivered to customers in a timely manner, and so on.Since the position of an account manager requires that you work closely with all kinds of people, your account manager resume also needs to show that you have strong interpersonal skills, as well as excellent communication skills and strong leadership skills.So, how do you create such a resume that gets hiring managers eager to meet you and hear what you can do for their organization?In this guide, I am going to show you exactly how to create an irresistible account manager resume that will have you booked for back to back job interviews.If you prefer building your resume automatically instead of doing everything from scratch, you can use our resume builder to create your account manager resume within a few minutes.Simply pick a template you like, add your resume content, and the resume builder will handle everything else for you with a single click.ACCOUN T MANAGER RESUME EXAMPLESBefore we get into how to write an account manager resume and the different sections you need to include in your resume, let’s start by looking at a few examples of some great account manager resumes.This way, you will have a clear idea of what we are trying to achieve right from the start.Entry Level Account Manager Resume Right Senior Account Manager Resume Right Create your own resumeBEST FORMAT FOR AN ACCOUNT MANAGER RESUMERecruiters and hiring managers do not have a lot of time to spend going through resumes, especially when they have hundreds of resumes to go through.Therefore, you want your resume to connect with the hiring manager immediately, the same way you help businesses connect with their customers. This starts with the format you choose to use on your account manager resume.The best format to use is the reverse-chronological resume format, because it allows you to quickly communicate your message by putting your most recent achievements first.The two sample resumes we looked at above are great examples of the reverse-chronological resume layout.This format allows the recruiter or hiring manager to quickly scan your resume and tell whether you have the qualifications and experience they are looking for or not.If you make it hard to find this information, your resume might get discarded even when you are the right fit for the job. To make it even easier for hiring managers to scan your resume, use professional resume fonts and utilize lots of white space.Finally, save your resume in PDF format, unless the job ad specifically states that you should use a different format. This is because most Applicant Tracking Systems (ATSs) are designed to read PDF formats.INTRODUCE YOURSELF WITH A WELL-WRITTEN PERSONAL INFORMATION SECTIONWhen you meet a prospective client, you start by introducing yourself.This sets off the interaction on the right foot. Similarly, since the recruiter or hiring manager has no knowledge of you before your resume lands on their desk, you should start by introducing yourself.Writing the personal information section of your account manager resume should be pretty easy. Here, you need to write your name, your professional title, your address (optional), your telephone number, and your email address.If you have a professional LinkedIn profile, you can also include a link to the profile.Below is a n example of a well written personal information section:Personal Information SectionAMANDA MEALING Senior Account Manager Address: Charlotte, North Carolina Telephone: +1-704-236-5689 Email: amandamealing@gmail.com LinkedIn: www.linkedin.com/mealingamanda RightBelow are a few things to keep in mind when writing the personal information section of your accounts manager resume:Use your full names as they appear on official documents. If you have a middle name, initialize it. For instance, instead of Amanda Louise Mealing, write Amanda L. Mealing.Avoid including information that could lead to a biased hiring decision, such as your marital status, gender, sexual orientation, race, or country of origin.Use a professional email address. Go for the format yourfullname@provider.com. Avoid using nicknames in your email address.If you have a professional LinkedIn profile, including a link to it in your personal information section. Keep in mind that 94% of recruiters are on LinkedIn and wil l often check out candidates on the social network before inviting them to interviews. Source: BambuBAIT THE RECRUITER WITH A COMPELLING RESUME SUMMARY OR OBJECTIVELike I mentioned earlier, recruiters and hiring managers are busy people. They don’t have lots of time to spend going through each single resume. Fortunately, because you used the reverse-chronological resume format that presented your most recent achievements first, your resume has gotten through the first round without getting eliminated.Still, this does not mean that you’ll get invited to the job interview. It still has to go through a second round of elimination.If you want to survive this round, you need to bait the recruiter and give them a reason for reason to read through your entire resume. To do this, you need to have a compelling resume summary or objective.The resume summary is an overview of your professional life as an account manager. It highlights your years of experience, your key skills, and your major achievements. The resume summary is best used when you have 3 or more years of experi ence.Below is an example of a great resume summary:SummaryCertified IT account manager with extensive experience spanning over 10 years. Has a proven track record of problem solving and relationship building skills, which I’m seeking to leverage to grow ROI for XYZ Ltd. Managed 7 junior account managers and oversaw over 40 accounts at Ostech Technologies. Improved Customer Satisfaction by 25% and increased revenue by 15%. RightIf you do not have a lot of experience, then you should go for the resume objective instead of the resume summary.The resume objective is all about showing your passion for the position you are applying for, since you don’t have any meaningful experience.The aim of the resume objective is to show the recruiter that you would really be a good fit for the job, even though you do not have lots of experience. It should also show that you have the kind of skills the recruiter is looking for.Below is an example of a great resume objective:Resume ObjectivePassio nate and energetic account manager aiming to improve customer satisfaction and customer retention for ABC Corporation. Helped boost retention by 20% as an intern at Jemslab Technologies by paying attention to client needs. Received commendations by management for my skill in dealing with difficult clients. RightBelow are some thing to keep in mind when writing your accounts manager resume summary or objective.Write is last so that you’ll have a good idea of what is contained in the rest of your resume. The summary or objective is an overview of the rest of your resume.Use the keywords used in the job advertisement in your resume summary or objective. This will increase the chances of your resume passing through the ATS.USE YOUR STELLAR ACCOUNT MANAGER EXPERIENCE TO PROVE THAT YOU’RE THE RIGHT FIT FOR THE JOBThe recruiter has read your resume summary and is now hooked.They are now interested in knowing more about you. Now is the time to convince them to pick the phone and book y ou for an interview by showing them your stellar account management experience.You want your experience to back the claims you just made in the resume summary.Here, you should give an overview of all your previous experience as an account manager and highlight your responsibilities and achievements while in these positions.Below are some things to keep in mind while writing the experience section of your account manager resume:Use bulleted points to describe your responsibilities and achievements. These are easier to scan and make your resume appear more organized and professional.Use the STAR format to structure your achievements. Basically, you should describe the Situation, the Task you were required to perform, the Action you took, and the Result you achieved.Use figures and statistics to quantify your achievements.If you have lots of experience, only include the experience that is most relevant to the position you are applying for.Below is an example of a well-written professio nal experience section:Professional Experience SectionSenior Account Manager, Amana Capital Ltd2017 to presentLeading and managing the accounts team.Maintaining and expanding relationships with key clients.Ensuring problem resolution and customer satisfaction. Improved customer satisfaction by 25% within first year.Coming up with strategies on how to grow the organizations key accounts. Grew key accounts by over 20% every year.Introduced and implemented the customer level pricing strategy, which increased revenue by 15%.Oversaw key accounts worth over $5 million in annual sales. RightIf you have no experience as an account manager, you can still convince the hiring manager that you are the right person for the job by mentioning any previous experience you have that requires skills that are transferrable to the role of an account manager, such as problem solving skills, customer service, relationship building, and so on.Even if this experience is from some volunteer position you too k while still in college, just mention it. The aim is to show that you have these skills and know how to apply them.ARE YOU MISSING OUT ON JOBS BECAUSE OF YOUR EDUCATION SECTION?Experience is the most important thing for account managers.However, this does not mean that you should ignore the education section of your account manager resume.The education section tells the recruiter that you are a qualified account manager, not someone who apprenticed their way to account management positions.The key things to do when listing your education is to mention the university you attended, the academic qualification you attained, and the year you graduated.You can also mention your GPA if it is above 3.5.However, if you want to set yourself apart from the other candidates, don’t stop there. Mention any achievements and accomplishments you attained while undertaking your education.Below is an example of a well-written education section:Education SectionEDUCATION2015 â€" 2019:   Bachelor of Business ManagementUniversity of WashingtonGPA 3.78Key AchievementsPresident of the university’s entrepreneurship organizationExcelled in marketing classesRan a blog on interpersonal skills RightTIP THE SCALES IN YOUR FAVOR BY HIGHLIGHTING YOUR ACCOUNT MANAGER SKILLSSo far, you have done pretty well in trying to convince the recruiter that you are the right person for the job.However, you want to make sure that they have no doubts about your abilities by mentioning your key skills.This way, even if they missed something while going through your experience section, your skills section will show them that you have the skills they are looking for.Some of the skills you might include in an account manager resume include:Examples of SkillsInterpersonal skillsAccount planningProblem solvingCommunication skillsNegotiation skillsSalesforceLeadership SkillsAttention to detailRelationship buildingHubSpot skillsCollaboration skillsSocial media skillsMS OfficeCreative thinkingData analytics Time management skills RightYou need to resist the temptation to include all these skills in your account manager resume.Honestly, no hiring manager is going to believe that you have all these skills, and therefore, including them all in your resume is akin to shooting yourself in the foot.Instead of doing that, what you should do is to go through the job ad, identify the skills the prospective employer is looking for, and then include them in your resume.However, if the employer is looking for a certain skill, and you know you are not good at that particular skill, do not include it in your resume.They might ask you to prove that you are good at that particular thing, and things will quickly go south for you. To avoid that, just be honest.When listing your skills, it is advisable to mix both soft and hard skills.Highlighting your hard skills shows that you have the technical skills required for the position of an account manager, while highlighting your soft skills shows that you have the people skills required to collaborate with colleagues and satisfy clients.GIVE YOURSELF AN EDGE BY ADDING OTHER SECTIONS IN YOUR ACCOUNT MANAGER RESUMEMost people will end their account manager resumes at the skills section, but since you want a resume that will give you an edge over the other candidates, you will add extra sections in your resume to show your passion for accounts management.You want the recruiter to know that account management is all that you live and breathe.Below are some of the extra sections you should consider adding in your account manager resume:CertificationsIf you have acquired any certifications related to account management, they are the perfect way to show recruiters your passion for accounts management, and you should therefore flaunt them in your resume.When listing your certifications, you should mention the name of the certification, the name of the issuing body, as well as the year when you received the certification.Volunteering Experien ceDo you have any volunteer experience in fields related to accounts management, or fields that allowed you to learn skills that are transferable to account management?Mention this experience. Describing your volunteer experience is actually a good way to cover your lack of actual account management experience (for entry level job seekers) or to cover employment gaps.Conferences And PublicationsIf you have attended or spoken at any conferences related to the account management field, or if your work has been featured in any relevant publications, don’t be afraid to toot your own horn. Your prospective employer will certainly be glad to have someone like you working for them.Below is an example of how to include additional sections in your account manager resume:Certification, Conferences and Publications SectionsCERTIFICATIONSCCNA â€" Cisco, 2017CSAM Account Manager Certification â€" SAMA, 2015CONFERENCESSAMA Account Management Conference 2019SAMA Account Management Conference 201 8PUBLICATIONSArticle on “Customer Retention” published on Harvard Business Review in 2019. RightWRAPPING UPWhile positions for account managers are quite competitive, you can place yourself miles ahead of the competition by following the tips described in this guide when writing your account manager resume. To summarize what you have learnt:Use the reverse-chronological resume format, which puts your most recent achievements first.Use your official names and a professional email address in the personal information section.Use a well-written, compelling resume summary or objective to bait the recruiter and convince them to read the rest of your resume.Prove you are the right person for the job by showcasing your stellar account management experience and linking it to what the recruiter is looking for.Tip the scales in your favor by showing you have the skills the recruiter is looking for.Add extra sections in your resume, such as certifications, volunteer experience, conferences and publications to show your passion in account management.Do that, and I can guarantee you that you’ll start getting more invites to job interviews.Finally, remember that you can always use our resume builder to automate the process of creating a professional account manager resume if you don’t want to do everything from scratch. Create your own resume

The Catastrophic Earthquake In Haiti - Free Essay Example

Sample details Pages: 2 Words: 491 Downloads: 4 Date added: 2019/08/06 Category Science Essay Level High school Tags: Earthquake Essay Did you like this example? At 4:53 p.m. on January 12, 2010, an earthquake with a magnitude of 7.0 struck Haiti. Within 20 minutes of the initial shock, two large aftershocks followed with respective magnitudes of 6.0 and 5.7. Leog- ne is the epicenter, a town approximately 15 miles southwest from Port-au-Prince, the Haitian capital. This location is near, if not on, the Enriquillo-Plantain Garden Fault. In recent years, Haiti has dealt with a series of disasters but this earthquake is deemed as a catastrophe.   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   Port-au-Prince and its surrounding metropolitan area has an estimated population of 3 million people. The Haitian Government confirmed that there were more than 230,000 dead, 300,000 injured, and more than 1.3 million displaced. Overall, roughly 3 million people were affected by the earthquake. The ratio of death to total population is the highest in modern times, making it the most destructive event on a global scale. Don’t waste time! Our writers will create an original "The Catastrophic Earthquake In Haiti" essay for you Create order   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   The earthquake took a toll on infrastructures with an estimated 80 percent of buildings damaged, if not completely destroyed. Schools, government offices and hospitals were especially damaged, as well as homes. The cost to repair Haiti is expected to be around 14 billion U.S. dollars. Socioeconomic factors contributed to the infrastructural damage and fatalities as Haiti is the most impoverished country in the western hemisphere. With little money, Haitis buildings are not durable enough to withstand natural disasters, despite the use of heavy concrete material. The buildings around Port-au-Prince typically consist of several stories due to limited space in a densely populated, urban location. A combination of poor structure and airborne material from a collapse likely contributed to the large amount of injuries and fatalities in the earthquake. Unpreparedness was another factor since earthquakes are not common in Haiti. If economic circumstances were different, the earthquakes devastation may have been minimized. Troubles continued after the earthquake with a series of landslides-more than 30,000 of them. A majority of these landslides occurred south of Leog?- ne, the epicenter, and traveled toward the coast. Tsunamis occurred near the Bay of Port-au-Prince and the island of Hispaniola, with waves approximately 10 feet high. Due to the small waves, the tsunamis were probably triggered by the landslides. The damage from the tsunamis was minimal even though it killed an additional three people.   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   The earthquake put Haiti at an even greater economic disadvantage. Any money that the nation had to rebuild itself is now needed for the cleanup. Others countries want to help Haiti but the aid is delayed due to inaccessible ship ports, airports, and paved roadways.   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   Haitis reputation of high unemployment rates is prolonged by the damage of the earthquake. The few jobs available in Haiti were agricultural but the necessary buildings and resources were destroyed by the natural disaster, additionally limiting the availability of clean water, food and shelter.   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   The catastrophic earthquake tested Haiti as a nation, illuminating the weakness of their infrastructure, economy and government. To improve living conditions, the country will have to depend on foreign aid. Long-term success, however, requires a functional government and cannot emerge through donations.

Sexual Harassment Laws Essays - 581 Words

Sexual Harassment Laws Sexual harassment is one of the biggest problems facing our schools and businesses today. A week rarely goes by without a reminder of the pervasiveness of sexual harassment as a social problem. The definition of sexual harassment is any unwanted or inappropriate sexual attention. That includes touching, looks, comments, or gestures. A key part of sexual harassment is that it is one sided and unwanted. There is a great difference between sexual harassment and romance or friendship, since those†¦show more content†¦The second element is acknowledged as with intent. This element states that the person who commits the harassment must intend to humiliate, offend or intimidate the complainant and/or the harassment must be of a kind that a reasonable person must th ink that the complainant might be humiliated, offended or intimidated by it. Furthermore, sexual harassment doesnt have to be repeated or ongoing to be against the law. Some actions or remarks are so offensive that theyre clearly sexual harassment, even if theyre not repeated. Other incidents, such as an unwanted invitation or compliment, are probably not harassment if they are ‘one-offs’. These laws were written in response to a number of cases where employees, particularly female employees, were made to feel uncomfortable in the workplace by harassment of a sexual nature. This type of conduct was discouraging women from entering the work force. By introducing laws against sexual harassment, the law aims to stop all members of society being susceptible to, or discouraged by sexual harassment. Furthermore, the element of unlawful harassment is described broadly. This ensures the protection of society from atypical behaviour, and bizarre acts which may never have been thought of. Subsequently, it remains obvious that attributableShow MoreRelatedThe Law For A Sexual Harassment Lawsuit1692 Words   |  7 Pages3. 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Financial Analysis of Bank of America Free Essays

Financial Statement Analysis of Bank of America Group 1 Chen, Yelin Dong, Xiaoxu Gransbach, Jennifer Shuai, Wang Weiss, Charles 1Financial Statements of Bank of America1 1. 1Balance sheet1 1. 2Income statement2 1. We will write a custom essay sample on Financial Analysis of Bank of America or any similar topic only for you Order Now 3Regulatory capital ratios2 1. 4Investment portfolio2 1. 5Impact of the FSP FAS 115-2 and FAS 124-2 on OTTI3 1. 5. 1Bank of America3 1. 5. 2JP Morgan Chase3 1. 5. 3Citi Group3 1. 6Netting Financial Instruments3 1. 6. 1Bank of America4 1. 6. 2Comparable banks4 1. 6. 3Analysis of the impact4 2Fair Value Accounting for Financial Instruments4 2. Fair value accounting4 Table 6 Summary of the Fair Value Income5 2. 2Opinions about fair value accounting5 3Interest Rate Risk and Net Interest Earnings6 3. 1Net interest margin6 3. 2Interest rate risk7 4Credit Risk and Losses7 4. 1Main loss reserve adequacy ratios8 4. 2Policy to designate past due loans as non-performing8 4. 3Adequacy of the bank’s allowance for loan losses8 4. 4Disclosure policies relating to loans8 5Appendix9 * Part 1 Financial Statements of Bank of America . 1. 1 Balance sheet Bank of America’s balance sheet has total assets of $2,129,046 million in 2011, which is less than last year’s $2,264,909 million, a fairly significant decline. There are a few primary assets on the balance sheet. The largest asset is loans and leases which makes up 41. 92% of the total assets. The next largest asset was Available-For-Sale securities making up 12. 97% of total assets. Total liabilities on the balance sheet were $1,898,945 million, with the primary liability being deposits in U. S. offices both interest bearing and noninterest bearing, at 50. 4% of total liabilities. The next largest liability was long-term debt at 19. % of total liabilities. In millions| 2011| % of total assets| 2010| % of total assets| % chg from 2010-2011| Total asset| 2,029,046 | 100. 00%| 2,264,909 | 100. 00%| -10. 41%| Loans and leases| 892,417 | 43. 98%| 898,555 | 39. 67%| -0. 68%| Available-for-sale| 276,151 | 13. 61%| 337,627 | 14. 91%| -18. 21%| Total liabilities| 1,898,945 | 9 3. 59%| 2,036,661 | 89. 92%| -6. 76%| Total deposits| 1,033,041 | 50. 91%| 1,010,430 | 44. 61%| 2. 24%| Deposits in U. S. offices| 957,042 | 47. 17%| 930,913 | 41. 10%| 2. 81%| Long-term debt| 372,265 | 18. 35%| 448,431 | 19. 80%| -16. 98%| Leverage ratio| 14. 0 | ? | 8. 92 | ? | 63. 58%| Table 1 Selected Financial Data from Balance Sheet of Bank of America Chase and Citi are fairly similar in size and distribution of their balance sheets. Chase and Citi have total assets of 2,265,792 and 1,873,878( ) respectively, both with slightly lower loans as a percentage of total assets at slightly over 30%, while AFS securities are around 16% of total assets for each. Liabilities are also very similar, with Chase having total liabilities of $2,082,219 million and Citi $1,694,305 million. The primary line items are also very similar once again with Chase’s total deposits 54. 6% and long-term debt 22. 77% of total liabilities, while Citi has deposits 51. 11% and long-term debt of 19. 09 %. According to the deposits in U. S. offices, BOA focus more in U. S market and Citi focus more on market outside U. S. In millions| Bank of America| % of total assets| JP Morgan Chase| % of total assets| Citi Group| % of total assets| Total asset| 2,129,046 | 100. 00%| 2,265,792 | 100. 00%| 1,873,878 | 100. 00%| Loans and leases| 892,417 | 41. 92%| 696,111 | 30. 72%| 617,127 | 32. 93%| Available-for-sale| 276,151 | 12. 97%| 364,793 | 16. 10%| 293,413 | 15. 66%| ? | ? | ? | ? | ? | ? | ? | In millions| Bank of America| % of total liabilities| JP Morgan Chase| % of total liabilities| Citi Group| % of total liabilities| Total liabilities| 1,898,945 | 100. 00%| 2,082,219 | 100. 00%| 1,694,305 | 100. 00%| Total deposits| 1,033,041 | 54. 40%| 1,127,806 | 54. 16%| 865,936 | 51. 11%| Long-term debt| 372,265 | 19. 60%| 256,775 | 22. 77%| 3,235,050 | 190. 94%| Leverage ratio| 8. 25 | ? | 11. 34 | ? | 9. 44 | ? | | | | | | | | In millions| Bank of America| % of total deposits| JP Morgan Chase| % of total deposits| Citi Group| % of total deposits| Deposits in U. S. offices| 957,042 | 92. 64%| 851,534 | 75. 0%| 343,288 | 39. 64%| Table 2 Selected Financial Data from Balance Sheets of Three Banks in 2011 In the event of a bank run, Bank of America will be in trouble due to its high leverage, similar to many banks. Bank of America has deposits of $1,033,041 million, among which liquid assets only have $314,425 million, including cash and cash equivalents of $120,102 million, time de posits and other short-term investments of $26,004 million and trading assets of $169,319 million. Even with the ability to liquidate those non-cash assets, it will still only be able to honor slightly more than 30% of its depositors. Income statement The primary line item on Bank of America’s income statement is net income of $1,446 million, which increased compared to a net loss of 2,238 in 2010. Interest income was $66,236 million, down from $75,497 million in 2010. Total interest expense was $21,620 million, which makes the net interest income become $44,616 million, down 13. 4% from the previous year. Lastly, total noninterest income was $48,838 million, decreased by 16. 8% from 2010. This is partly due to the big loss of mortgage banking income, decreasing from $2,734 million in 2010 to $(8,830) million in 2011. Chase and Citi had similar trends, both slightly increasing their bottom line while having net interest income decrease slightly. Regulatory capital ratios 2011| Bank of America| JP Morgan Chase| Citi Group| To be well capitalized| Leverage ratio| 7. 53%| 6. 80%| 7. 19%| 5%| Tier 1 risk-based capital ratio| 12. 40%| 12. 30%| 13. 55%| 6%| Total risk-based| 16. 75%| 15. 40%| 16. 99%| 10%| Table 3 Regulatory Capital Ratios of Three Banks in 2011 In 2011, Bank of America was considered well capitalized for all three regulatory ratios–Tier 1 capital, risk-based capital and leverage. Bank of America slightly increased all of its ratios from 2010 to 2011. Its tier 1 capital ratio was 12. 4% while 6% is considered well capitalized, its risk based capital ratio was 16. 75% while 10% is considered well capitalized, and its leverage ratio was 7. 53% while 5% is considered well capitalized. ( Table 4, Table 3) Chase and Citi had very similar ratios to Bank of America. Chase was slightly below Bank of America and Citi for all three ratios but still well above the floor to be well capitalized. Citi had a slightly lower leverage ratio and slightly higher tier 1 capital and risk based capital ratios. Regulatory ratios are fairly important; however there are some issues with them. The ratios are backwards looking, so there could be a large amount of change since in the numbers. There are also lots of adjustments made by the company to the different numbers that make up the ratio that might not even make sense such as ignoring AFS losses. The current risk weighting is also very simplistic currently and might not reflect the actual risk of the assets. One important thing to note is that the newly released Basel III norms by Basel Committee on Banking Supervision (BCBS) would require a higher regulatory capital ratio on banks. It is recommended that Basel III be implemented by January 1, 2015. According to the new rules, the mandatory Tier 1 common capital ratio would be 7%. Banks should maintain conservation buffer of 2. 5% and reserves amounting to 8. 5% of assets. Therefore, in order for Bank of America to meet the future requirements and be well capitalized in face of potential financial meltdowns, it should hold more and better quality capital, carry more liquid ssets, and limit leverage. ( , ) Investment portfolio The net unrealized gains on HTM securities of $177 million = $181 million + ($4) million that have not been recognized in OCI as of the end of 2011 are attributable to HTM securities that have not been deemed other than temporarily (OTT) impaired, so that amortized cost is the carrying value. Amortized cost is a hi ghly limited valuation basis for risky securities. There was very little mention of reclassification in Bank of America’s 10-K. There was a mention of a reclassification of $26. billion primarily due to noninterest earning equity securities being moved from trading account assets to other assets, but no mention of anything else. Impact of the FSP FAS 115-2 and FAS 124-2 on OTTI Bank of America According to FSP FAS 115-2 and FAS 124-2, banks are allowed to report non-credit related OTTI in Other Comprehensive Income (OCI). Only credit-related OTTI is recognized in net income. The Total OTTI losses (unrealized and realized) for 2011 is $360 million, and portion of other-than-temporary impairment losses recognized in other comprehensive income is about $61 millions. The net amount is $299 million which is recognized in earnings on AFS debt securities in 2011, compared to $970 million on AFS debt and marketable equity securities in 2010. When we compute the regulatory Tier One Capital, the unrealized losses on AFS investments are (added back) excluded. Thus, the $61 million is added back to calculate the Tier One Capital. With adding back, Tier 1 risk-based capital ratio is 12. 40% as shown on 2011 Y9C. In absence of adding back, the ratio is (159,231,999-61,000)/ 1,284,466,933=12. 39%. JP Morgan Chase For JP Morgan Chase, the10K shows Total other-than-temporary impairment losses for are 27, 94, nd 946 million for year 2011, 2010 and 2009 respectively. ( ) However, it doesn’t divide these amounts into credit-related portion and non-credit related portion. Based on the other two banks examples, we can infer that the Tier One Capital for JP Morgan Chase will go up after adoption. Citi Group Citigroup also adopted the same rules above in fir st quarter of 2009. As a result of the FSP, Company’s Consolidated Statement of Income reflects the full impairment on debt securities that the Company intends to sell or would more-likely-than-not be required to sell before the expected recovery of the amortized cost basis. As a result of the adoption of the FSP, Citigroup’s income in the first quarter of 2009 was higher by $631 million on a pretax basis ($391 million on an after-tax basis) and AOCI was decreased by a corresponding amount. However, 2011 10K does not gives details about regarding the credit loss component of OTTI in 2011. When we compute the regulatory Tier One Capital for Citigroup, the unrealized losses from non-credit loss component on debt securities are (added back) excluded, which leads to an increase in Tier One Capital. Netting Financial Instruments | Â  | Bank of America| JP Morgan Chase| Citi Group| IFRS(Before netting)| Total assets| 2,130,796| 3,976,317| 2,749,470| | Total debt| 1,900,695| 3,792,742| 2,564,671| | Total equity| 230,101| 183,575| 184,799| | Leverage ratio| 8. 26| 20. 66| 13. 88| GAAP(After netting)| Total assets| 2,129,046| 2,265,792| 1,873,878| | Total debt| 1,898,945| 2,082,219| 1,694,305| | Total equity| 230,101| 183,573| 179,573| | Leverage ratio| 8. 25| 11. 34| 9. 44| Table 4 Netting Adjustments for Three Banks in 2011 Bank of America According to Note 4—Derivatives, Bank of America had legally enforceable master netting agreement that would reduce both derivative assets and derivative liabilities by the same amount of 1,749. 9 million, respectively. Moreover, cash collateral was applied to net off derivative assets by 58. 9 million and derivative liabilities by 51. 9 million, respectively. However, the reduction caused by cash collateral wouldn’t affect total assets and total liabilities. If Band of America were to adopt IFRS, it would report higher gross derivative assets and liabilities by an increase of 1,749. million. However, the adjustment (1,749. 9 million) was insignificant compared to Bank of America’s total asset base (2,129,046 million, about 0. 08%). Therefore, the leverage ratio would only increase slightly due to this change, from 8. 25 under GAAP to 8. 26 under IFRS. Comparable banks J. P. Morgan Chase’s gross derivative assets were offset by 1,710,525 million netting ad justments and gross derivative liabilities by 1,710,523. Such adjustments almost made up of 75% of Chase’s total asset base which is 2,265,792 million. Therefore, if to adopt IFRS, Chase would record a much higher assets and liabilities up to 3,976,317 million and 3,792,742 million, respectively. Leverage ratio, accordingly, would rise from 11. 34 to 20. 66, with an almost doubled increase. Citi Group’s netting adjustments of 875,592 million against derivative assets made up 46. 7% of total assets, and 870,366 million against derivative liabilities made up 33. 9% of total liabilities. When adopting IFRS, Citi would report a higher assets and liabilities, with its leveraging ratio growing from 9. 44 to 13. 88 due to the significant amount of the netting adjustments. Analysis of the impact From the above table, we can see that Bank of America was merely affected by the presentation of netting financial instruments, while the other two banks were greatly affected in terms of leverage ratio. The main reason to such a distinguished difference is that Bank of America had the smallest investment in derivative instruments, compared to Chase and Citi. The gross approach would definitely give a more comprehensive picture of banks’ derivative instruments; however, it would overstate risk to some extent. Market risk of the derivative positions can be better evaluated using the gross presentation which is more detailed. Firstly, net figures are by far more relevant metrics than the gross amounts. Naturally, this comes about from looking to the way that derivatives are traded under an enforceable master netting agreement. The master netting agreement allows for the aggregation of all trades and the replacement by a single net amount. Secondly, another metric to measure derivative portfolios is volatility which is driven by the risk of open market positions and the potential changes in net asset values and not the size of gross derivatives amounts. Therefore, gross balance sheet amounts are not particularly useful indicators of how much net derivative asset values would have to change before solvency is affected. Finally, as the third most important metric when evaluating the risks, collateral together with cash settlement procedures results in a liquidity profile that is more aligned with net presentation. Collateral amounts further reduce the risks and have to be taken into consideration for reporting derivatives Fair Value Accounting for Financial Instruments Fair value accounting From table 5 and the three computation tables in Appendix, we can see that under Full Fair Value method, Bank of America’s net income would grow from 1,446 million to 2,750 million, an increase of 90. 2%. Similarly, Citi would experience an increase of 128. 2% in net income from 11,067 million to 25,257 million. However, full fair value method had insignificant impact on Chase, with a total adjustment of 1,773 million compared to its pre-adjustment net income of 18,976 million. In millions| Bank of America| JP Morgan Chase| Citi Group| Adjustments for assets and liabilities at HC on balance sheet| 6,127 | 1,140 | 12,000 | Adjustments for assets and liabilities at FV on balance sheet with gains and losses in OCI| -4,819 | 633 | 2,190 | Total adjustment| 1,308 | 1,773 | 14,190 | Net income as per financial statements| 1,446 | 18,976 | 11,215 | Full fair value income with information available| 2,754 | 20,749 | 25,405 | * Table 5 Summary of the Fair Value Income Another thing to note is that BOA stands out as it had a significant unrealized loss of 4,819 million on AFS, while its comparable banks, Chase and Citi, had a positive gain of 633 million and 2,190 million, respectively. Based on our analysis, such difference was driven by the following factors. (1). According to its disclosure, Bank of America recognized $299 million of other-than-temporary impairment (OTTI) losses in earnings on AFS debt securities in 2011 compared to $970 million on AFS debt and marketable equity securities in 2010, which contributes greatly in such a large amount of unrealized loss on AFS. The recognition of OTTI losses on AFS debt and marketable equity securities is based on a variety of factors, including the length of time and extent to which the market value has been less than amortized cost, the financial condition of the issuer of the security including credit ratings and any specific events affecting the operations of the issuer, underlying assets that collateralize the debt security, other industry and macroeconomic conditions, and management’s intent and ability to hold the security to recovery. (2). According to its disclosure, Bank of America presents debt securities purchased for longer term investment purposes which are as part of asset and liability management (ALM) and other strategic activities, as available-for-sale (AFS) securities, and report these securities at fair value with net unrealized gains and losses included in accumulated OCI. In 2011, the fair value of net ALM contracts decreased $7. 9 billion to a gain of $4. 7 billion, compared to $12. 6 billion in 2010. The decrease was primarily attributable to changes in the value of U. S. dollar-denominated pay-fixed interest rate swaps of $9. billion, foreign exchange contracts of $1. 8 billion and foreign exchange basis swaps of $1. 4 billion. The decrease was partially offset by a gain from the changes in the value of U. S. dollar-denominated receive-fixed interest rate swaps of $6. 6 billion. Opinions about fair value accounting Fair Value Accounting has many advantages and disadvantages as listed below. FVA advant ages include the following: FVA depicts a clearer picture of the company’s financial situation, as it provides an accurate asset and liability valuation as the prices are reflected in the market price. Fair value accounting limits managers’ ability to manipulate the reported net income, as the gains and losses are reported in the period they occur, not when they are realized as the result of a transaction. For Level 1 2, the price for financial instruments, are available in a liquid market. While under amortized accounting method, firms can manage their income through the selective realization of cumulative unrealized gains and losses on positions, an activity referred to as gains trading. FVA provides investors with more accurate, timely, and comparable financial information versus other alternative accounting approaches, even during extreme market conditions. Gains losses resulting from changes in fair value estimates indicate economic events that companies and investors may find worthy of additional disclosures. Under amortized accounting, income typically is persistent for as long as firms hold positions, but becomes transitory when positions mature or are disposed of and firms replace them with new positions at current market terms. Disadvantages of FVA include: The price for certain assets and liabilities may fluctuate often, resulting in higher volatility than other accounting methods. When the market is volatile, the price for financial instruments may change a lot, so companies may recognize gains/losses. This volatility of earnings would make it more difficult for users to predict future performance and make regulatory capital ratio vary dramatically across periods. A solution for this disadvantage is regulatory capital should be delinked from fair value and reported by using historic cost information. After the market stabilizes, the price may change back to the normal level. Not every asset or liability can be easily fair valued. For financial instruments in level 3, there is no fair value in the liquidity market. Managers need model to estimate the value of financial instruments in level 3. Using fair value accounting may have adverse effect on a down market. Companies may sell some financial instruments whose value decreased because of the drop in the current market price. They may not realize the drop without the fair value accounting. The market may stabilize over time, and the price for the financial instruments will return to their normal level. Another issue with fair value accounting is that when the market for instruments freezes up and there’s no liquidity in the market, financial instruments would have to be valued by using mark-to-model which in many situations are not reliable and transparent to investors. A solution to this is that regulators provide more specific guidance on how to determine fair value for financial statements. Disclosure requirements would include disclosure of fair value of all financial instruments along with method adopted to determine fair values, any significant assumptions used in their estimation, some indications of the sensitivity of the estimated fair value to these assumptions, and discussion of risk exposure and issues associated with the estimation of fair value. In addition, fair value accounting has very significant feedback effects, especially during financial crisis. Fair value accounting would further contribute to the deterioration in the value of a company’s financial instruments or assets and make it more difficult for companies to recover from the crisis. Recommendation here is that in special situations, regulators would allow companies that face severe crisis to adopt other accounting methods temporarily and minimize the loss of these companies. In summary, fair value has both advantages and disadvantages under today’s economy. FVA provides better insight of the financial statements, in ddition to limiting the potential for manipulation. However, in my opinion, under today’s economy situation, it is hard to fully implement the fair value accounting. Every disadvantage has proposed solutions to resolve the issues identified. Overall, FVA is recommended for use. Interest Rate Risk and Net Interest Earnings Net interest margin The net interest yield on a FTE basis was 2. 48 percent for 2011 compared to 2. 78 percent for 2 010. Net interest income on a FTE basis decreased $7. 1 billion in 2011 to $45. 6 billion. The decline was primarily due to: (1). There’s a noticeable decrease in the yield on consumer loans from 6. 04% in 2010 to 5. 37% in 2011, which reduces net interest income by about 4,244 million (633,507 million * 0. 57%). * Debt securities and residential mortgage mainly contributed to the decline. The yield rate for debt securities decreased from 3. 66% to 2. 85%, and the residential mortgage from 4. 78% to 4. 18%. (2). Noninterest income declined from the previous year due to lower mortgage banking income, reflecting$11. 6 billion in representations and warranties costs and decline of $3. billion income from trading account profits. Noninterest income being the major source of Bank of America’s income drastically impacts the profitability of the company. (3). In 2011 Bank of America had a decreased investment security yields, including the acceleration of purchase premium amortization from an increase in modeled prepayment expectations, and increased hedge ineffectiveness. (4). Bank of America’s d eclining net interest margin was partially offset by ongoing reductions in its debt footprint and lower rates paid on deposits. The total U. S interest-bearing deposits had an average yield of 0. 36%, compared to 0. 55% in 2008. Such downward trend in net interest margin can be observed in other banks as well. The following table presents total interest-earning assets rate and total interest-bearing liabilities for all three banks over 2009 to 2011. As shown, all banks experienced a decline in interest-earning assets rate over three years: 1) BOA from 4. 31% in 2009 to 3. 65% in 2011, with an average decrease of 8% every year; 2) Chase from 4. 04% to 3. 1%, with an average decrease of 6. 8%; 3) Citi from 4. 78% to 4. 27%, with an average decrease of 5. 5%. The main reasons for the other two banks’ declining net interest margin were higher deposit balances with lower loan yields. | Bank of America| JP Morgan Chase| Citi Group| | 2011| 2010| 2009| 2011| 2010| 2009| 2011| 2010| 2009| Total interest-earning assets rate| 3. 65%| 4. 02%| 4. 31%| 3. 51%| 3. 83%| 4. 04%| 4. 27%| 4. 55%| 4. 78%| Total interest- bearing liabilities| 1. 39%| 1. 39%| 1. 77%| 0. 86%| 0. 84%| 1. 02%| 1. 63%| 1. 61%| 1. 3%| Table 6 Net Interest Margin of Three Banks Interest rate risk BOA’s net interest income decreased by $2,122 million in 2011 and $998 million in 2010 from a 1% downward parallel shift in interest rate. 1% downward change in interest rate results in a bigger decrease in net interest income in 2011 than in 2010. However, according Chase’s 10K, downward 100bps parallel shocks result in a Federal Funds target rate of zero and negative three- and six-month treasury rates. The earnings-at-risk results of such a low-probability scenario are not meaningful. For Citi, a 100 bps decrease in interest rates would imply negative rates for the yield curve, so not meaningful either. 1% downward shift| 2011| 2010| BOA| ($2,122)| ($998)| JP Morgan Chase| NM| NM| Citi Group| NM| NM| Table 7 The Impact of 1% downward shift on Net Interest Income BOA’s net interest income would increase by $1,505 million in 2011 and $601 million in 2010 from a 1% upward parallel shift in interest rate. The same as downward change, 1% upward change in interest rate also would result in a bigger increase in the net interest income in 2011 than in 2010. Compared with BOA, 1% upward shift in interest rate has a bigger impact for Chase and smaller impact for Citi. 1% upward shift| 2011| 2010| Bank of America| $1,505 | $601 | JP Morgan Chase| $2,326 | $1,483 | Citi Group| $97 | ($105)| Table 8 The Impact of 1% Upward Shift on Net Interest Income Credit Risk and Losses Main loss reserve adequacy ratios Policy to designate past due loans as non-performing Adequacy of the bank’s allowance for loan losses Disclosure policies relating to loans Appendix BOA In $ millions| 2011| 2011| 2010| 2010| 2011| 2010| 2011| ? | Carrying Value| Fair Value| Carrying Value| Fair Value| CURG| CURG| URG| Adjustments for assets and liabilities at HC on balance sheet| Assets:| ? | ? | ? | ? | ? | ? | ? | Held-to maturity debt securities| 35,265 | 35,442 | 427 | 427 | 177 | – | 177 | Loans| 870,520 | 843,392 | 876,739 | 861,695 | (27,128)| (15,044)| (12,084)| Total assets| 905,785 | 878,834 | 877,166 | 862,122 | (26,951)| (15,044)| (11,907)| Liabilities:| ? ? | ? | ? | ? | ? | ? | Deposits| 1,033,041 | 1,033,248 | 1,010,430 | 1,010,460 | 207 | 30 | 177 | Long-term debt| 372,265 | 343,211 | 448,431 | 441,672 | (29,054)| (6,759)| (22,295)| Total liabilities| 1,405,306 | 1,376,459 | 1,458,861 | 1,452,132 | (28,847)| (6,729)| (22,118)| Pretax adjustments before AFS securities and CFH derivatives| ? | ? | ? | ? | 1,896 | (8,315)| 10,211 | Aftertax adjustments before AFS securities and CFH derivatives| ? | ? | ? | ? | ? ? | 6,127 | Adjustments for assets and liabilities at FV on balance sheet with gains and losses in OCI? | Aftertax adjustment for AFS securities| ? | ? | ? | ? | ? | ? | (4,270)| Aftertax adjustment for CFH derivatives| ? | ? | ? | ? | ? | ? | (549)| Total adjustment to net income| ? | ? | ? | ? | ? | ? | 1,308 | Net income as per financial statements| ? | ? | ? | ? | ? | ? | 1,446 | Full fair value income with information available| ? | ? | ? | ? | ? | ? | 2,754 | JP Morgan Chase In $ millions| 2011| 2011| 2010| 2010| 2011| 2010| 2011| ? | Carrying Value| Fair Value| Carrying Value| Fair Value| CURG| CURG| URG| Adjustments for assets and liabilities at HC on balance sheet| Assets:| ? | ? | ? | ? | ? | ? | ? | Loans| 696,100 | 695,800 | 660,700 | 663,500 | (300)| 2,800 | (3,100)| Other| 66,300 | 66,800 | 64,900 | 65,000 | 500 | 100 | 400 | Total assets| 762,400 | 762,600 | 725,600 | 728,500 | 200 | 2,900 | (2,700)| Liabilities:| ? | ? | ? | ? | ? | ? | ? | Deposits| 1,127,800 | 1,128,300 | 930,400 | 931,500 | 500 | 1,100 | (600)| Accounts payable and other liabilities| 167,000 | 166,900 | 138,200 | 138,200 | (100)| – | (100)| Beneficial interests issued by consolidated VIEs| 66,000 | 66,200 | 77,600 | 77,900 | 200 | 300 | (100)| Long-term debt and junior subordinated deferrable interest debentures| 256,800 | 254,200 | 270,700 | 271,900 | (2,600)| 1,200 | (3,800)| Total liabilities| 1,617,600 | 1,615,600 | 1,416,900 | 1,419,500 | (2,000)| 2,600 | (4,600)| Pretax adjustments before AFS securities and CFH derivatives| ? | ? ? | ? | 2,200 | 300 | 1,900 | Aftertax adjustments before AFS securities and CFH derivatives| ? | ? | ? | ? | ? | ? | 1,140 | Adjustments for assets and liabilities at FV on balance sheet with gains and losses in OCI| Aftertax adjustment for AFS securities| ? | ? | ? | ? | ? | ? | 1,067 | Aftertax adjustment for CFH derivatives| ? | ? | ? | ? | ? | ? | (279)| Cash flow hedge| ? | ? | ? | ? | ? | ? | (155)| Total adjustment to net income| ? | ? | ? | ? | ? | ? | 1,773 | Net income as per financial statements| ? | ? | ? | ? | ? | ? | 18,976 | Full fair value income with information available| ? ? | ? | ? | ? | ? | 20,749 | Citi Group In $ millions| 2011| 2011| 2010| 2010| 2011| 2010| 2011| ? | Carrying Value| Fair Value| Carrying Value| Fair Value| CURG| CURG| URG| Adjustments for assets and liabilities at HC on balance sheet? | Assets:| ? | ? | ? | ? | ? | ? | ? | Investment| 293,400 | 292,400 | 318,200 | 319,000 | (1,000)| 800 | (1,800)| Loans| 614,600 | 603,900 | 605,500 | 584,300 | (10,700)| (21,200)| 10,500 | Total assets| 908,000 | 896,300 | 923,700 | 903,300 | (11,700)| (20,400)| 8,700 | Liabilities:| ? ? | ? | ? | ? | ? | ? | Deposits| 865,900 | 865,800 | 845,000 | 843,200 | (100)| (1,800)| 1,700 | Long-term debt| 323,500 | 313,800 | 381,200 | 384,500 | (9,700)| 3,300 | (13,000)| Total liabilities| 1,189,400 | 1,179,600 | 1,226,200 | 1,227,700 | (9,800)| 1,500 | (11,300)| Pretax adju stments before AFS securities and CFH derivatives| ? | ? | ? | ? | (1,900)| (21,900)| 20,000 | Aftertax adjustments before AFS securities and CFH derivatives| ? ? | ? | ? | ? | ? | 12,000 | Adjustments for assets and liabilities at FV on balance sheet with gains and losses in OCI| Aftertax adjustment for AFS securities| ? | ? | ? | ? | ? | ? | 2,360 | Cash flow hedge| ? | ? | ? | ? | ? | ? | (170)| Total adjustment to net income| ? | ? | ? | ? | ? | ? | 14,190 | Net income as per financial statements| ? | ? | ? | ? | ? | ? | 11,215 | Full fair value income with information available| ? | ? | ? | ? | ? | ? | 25,405 | How to cite Financial Analysis of Bank of America, Papers Financial Analysis of Bank of America Free Essays Financial Statement Analysis of Bank of America Group 1 Chen, Yelin Dong, Xiaoxu Gransbach, Jennifer Shuai, Wang Weiss, Charles 1Financial Statements of Bank of America1 1. 1Balance sheet1 1. 2Income statement2 1. We will write a custom essay sample on Financial Analysis of Bank of America or any similar topic only for you Order Now 3Regulatory capital ratios2 1. 4Investment portfolio2 1. 5Impact of the FSP FAS 115-2 and FAS 124-2 on OTTI3 1. 5. 1Bank of America3 1. 5. 2JP Morgan Chase3 1. 5. 3Citi Group3 1. 6Netting Financial Instruments3 1. 6. 1Bank of America4 1. 6. 2Comparable banks4 1. 6. 3Analysis of the impact4 2Fair Value Accounting for Financial Instruments4 2. Fair value accounting4 Table 6 Summary of the Fair Value Income5 2. 2Opinions about fair value accounting5 3Interest Rate Risk and Net Interest Earnings6 3. 1Net interest margin6 3. 2Interest rate risk7 4Credit Risk and Losses7 4. 1Main loss reserve adequacy ratios8 4. 2Policy to designate past due loans as non-performing8 4. 3Adequacy of the bank’s allowance for loan losses8 4. 4Disclosure policies relating to loans8 5Appendix9 * Part 1 Financial Statements of Bank of America . 1. 1 Balance sheet Bank of America’s balance sheet has total assets of $2,129,046 million in 2011, which is less than last year’s $2,264,909 million, a fairly significant decline. There are a few primary assets on the balance sheet. The largest asset is loans and leases which makes up 41. 92% of the total assets. The next largest asset was Available-For-Sale securities making up 12. 97% of total assets. Total liabilities on the balance sheet were $1,898,945 million, with the primary liability being deposits in U. S. offices both interest bearing and noninterest bearing, at 50. 4% of total liabilities. The next largest liability was long-term debt at 19. % of total liabilities. In millions| 2011| % of total assets| 2010| % of total assets| % chg from 2010-2011| Total asset| 2,029,046 | 100. 00%| 2,264,909 | 100. 00%| -10. 41%| Loans and leases| 892,417 | 43. 98%| 898,555 | 39. 67%| -0. 68%| Available-for-sale| 276,151 | 13. 61%| 337,627 | 14. 91%| -18. 21%| Total liabilities| 1,898,945 | 9 3. 59%| 2,036,661 | 89. 92%| -6. 76%| Total deposits| 1,033,041 | 50. 91%| 1,010,430 | 44. 61%| 2. 24%| Deposits in U. S. offices| 957,042 | 47. 17%| 930,913 | 41. 10%| 2. 81%| Long-term debt| 372,265 | 18. 35%| 448,431 | 19. 80%| -16. 98%| Leverage ratio| 14. 0 | ? | 8. 92 | ? | 63. 58%| Table 1 Selected Financial Data from Balance Sheet of Bank of America Chase and Citi are fairly similar in size and distribution of their balance sheets. Chase and Citi have total assets of 2,265,792 and 1,873,878( ) respectively, both with slightly lower loans as a percentage of total assets at slightly over 30%, while AFS securities are around 16% of total assets for each. Liabilities are also very similar, with Chase having total liabilities of $2,082,219 million and Citi $1,694,305 million. The primary line items are also very similar once again with Chase’s total deposits 54. 6% and long-term debt 22. 77% of total liabilities, while Citi has deposits 51. 11% and long-term debt of 19. 09 %. According to the deposits in U. S. offices, BOA focus more in U. S market and Citi focus more on market outside U. S. In millions| Bank of America| % of total assets| JP Morgan Chase| % of total assets| Citi Group| % of total assets| Total asset| 2,129,046 | 100. 00%| 2,265,792 | 100. 00%| 1,873,878 | 100. 00%| Loans and leases| 892,417 | 41. 92%| 696,111 | 30. 72%| 617,127 | 32. 93%| Available-for-sale| 276,151 | 12. 97%| 364,793 | 16. 10%| 293,413 | 15. 66%| ? | ? | ? | ? | ? | ? | ? | In millions| Bank of America| % of total liabilities| JP Morgan Chase| % of total liabilities| Citi Group| % of total liabilities| Total liabilities| 1,898,945 | 100. 00%| 2,082,219 | 100. 00%| 1,694,305 | 100. 00%| Total deposits| 1,033,041 | 54. 40%| 1,127,806 | 54. 16%| 865,936 | 51. 11%| Long-term debt| 372,265 | 19. 60%| 256,775 | 22. 77%| 3,235,050 | 190. 94%| Leverage ratio| 8. 25 | ? | 11. 34 | ? | 9. 44 | ? | | | | | | | | In millions| Bank of America| % of total deposits| JP Morgan Chase| % of total deposits| Citi Group| % of total deposits| Deposits in U. S. offices| 957,042 | 92. 64%| 851,534 | 75. 0%| 343,288 | 39. 64%| Table 2 Selected Financial Data from Balance Sheets of Three Banks in 2011 In the event of a bank run, Bank of America will be in trouble due to its high leverage, similar to many banks. Bank of America has deposits of $1,033,041 million, among which liquid assets only have $314,425 million, including cash and cash equivalents of $120,102 million, time de posits and other short-term investments of $26,004 million and trading assets of $169,319 million. Even with the ability to liquidate those non-cash assets, it will still only be able to honor slightly more than 30% of its depositors. Income statement The primary line item on Bank of America’s income statement is net income of $1,446 million, which increased compared to a net loss of 2,238 in 2010. Interest income was $66,236 million, down from $75,497 million in 2010. Total interest expense was $21,620 million, which makes the net interest income become $44,616 million, down 13. 4% from the previous year. Lastly, total noninterest income was $48,838 million, decreased by 16. 8% from 2010. This is partly due to the big loss of mortgage banking income, decreasing from $2,734 million in 2010 to $(8,830) million in 2011. Chase and Citi had similar trends, both slightly increasing their bottom line while having net interest income decrease slightly. Regulatory capital ratios 2011| Bank of America| JP Morgan Chase| Citi Group| To be well capitalized| Leverage ratio| 7. 53%| 6. 80%| 7. 19%| 5%| Tier 1 risk-based capital ratio| 12. 40%| 12. 30%| 13. 55%| 6%| Total risk-based| 16. 75%| 15. 40%| 16. 99%| 10%| Table 3 Regulatory Capital Ratios of Three Banks in 2011 In 2011, Bank of America was considered well capitalized for all three regulatory ratios–Tier 1 capital, risk-based capital and leverage. Bank of America slightly increased all of its ratios from 2010 to 2011. Its tier 1 capital ratio was 12. 4% while 6% is considered well capitalized, its risk based capital ratio was 16. 75% while 10% is considered well capitalized, and its leverage ratio was 7. 53% while 5% is considered well capitalized. ( Table 4, Table 3) Chase and Citi had very similar ratios to Bank of America. Chase was slightly below Bank of America and Citi for all three ratios but still well above the floor to be well capitalized. Citi had a slightly lower leverage ratio and slightly higher tier 1 capital and risk based capital ratios. Regulatory ratios are fairly important; however there are some issues with them. The ratios are backwards looking, so there could be a large amount of change since in the numbers. There are also lots of adjustments made by the company to the different numbers that make up the ratio that might not even make sense such as ignoring AFS losses. The current risk weighting is also very simplistic currently and might not reflect the actual risk of the assets. One important thing to note is that the newly released Basel III norms by Basel Committee on Banking Supervision (BCBS) would require a higher regulatory capital ratio on banks. It is recommended that Basel III be implemented by January 1, 2015. According to the new rules, the mandatory Tier 1 common capital ratio would be 7%. Banks should maintain conservation buffer of 2. 5% and reserves amounting to 8. 5% of assets. Therefore, in order for Bank of America to meet the future requirements and be well capitalized in face of potential financial meltdowns, it should hold more and better quality capital, carry more liquid ssets, and limit leverage. ( , ) Investment portfolio The net unrealized gains on HTM securities of $177 million = $181 million + ($4) million that have not been recognized in OCI as of the end of 2011 are attributable to HTM securities that have not been deemed other than temporarily (OTT) impaired, so that amortized cost is the carrying value. Amortized cost is a hi ghly limited valuation basis for risky securities. There was very little mention of reclassification in Bank of America’s 10-K. There was a mention of a reclassification of $26. billion primarily due to noninterest earning equity securities being moved from trading account assets to other assets, but no mention of anything else. Impact of the FSP FAS 115-2 and FAS 124-2 on OTTI Bank of America According to FSP FAS 115-2 and FAS 124-2, banks are allowed to report non-credit related OTTI in Other Comprehensive Income (OCI). Only credit-related OTTI is recognized in net income. The Total OTTI losses (unrealized and realized) for 2011 is $360 million, and portion of other-than-temporary impairment losses recognized in other comprehensive income is about $61 millions. The net amount is $299 million which is recognized in earnings on AFS debt securities in 2011, compared to $970 million on AFS debt and marketable equity securities in 2010. When we compute the regulatory Tier One Capital, the unrealized losses on AFS investments are (added back) excluded. Thus, the $61 million is added back to calculate the Tier One Capital. With adding back, Tier 1 risk-based capital ratio is 12. 40% as shown on 2011 Y9C. In absence of adding back, the ratio is (159,231,999-61,000)/ 1,284,466,933=12. 39%. JP Morgan Chase For JP Morgan Chase, the10K shows Total other-than-temporary impairment losses for are 27, 94, nd 946 million for year 2011, 2010 and 2009 respectively. ( ) However, it doesn’t divide these amounts into credit-related portion and non-credit related portion. Based on the other two banks examples, we can infer that the Tier One Capital for JP Morgan Chase will go up after adoption. Citi Group Citigroup also adopted the same rules above in fir st quarter of 2009. As a result of the FSP, Company’s Consolidated Statement of Income reflects the full impairment on debt securities that the Company intends to sell or would more-likely-than-not be required to sell before the expected recovery of the amortized cost basis. As a result of the adoption of the FSP, Citigroup’s income in the first quarter of 2009 was higher by $631 million on a pretax basis ($391 million on an after-tax basis) and AOCI was decreased by a corresponding amount. However, 2011 10K does not gives details about regarding the credit loss component of OTTI in 2011. When we compute the regulatory Tier One Capital for Citigroup, the unrealized losses from non-credit loss component on debt securities are (added back) excluded, which leads to an increase in Tier One Capital. Netting Financial Instruments | Â  | Bank of America| JP Morgan Chase| Citi Group| IFRS(Before netting)| Total assets| 2,130,796| 3,976,317| 2,749,470| | Total debt| 1,900,695| 3,792,742| 2,564,671| | Total equity| 230,101| 183,575| 184,799| | Leverage ratio| 8. 26| 20. 66| 13. 88| GAAP(After netting)| Total assets| 2,129,046| 2,265,792| 1,873,878| | Total debt| 1,898,945| 2,082,219| 1,694,305| | Total equity| 230,101| 183,573| 179,573| | Leverage ratio| 8. 25| 11. 34| 9. 44| Table 4 Netting Adjustments for Three Banks in 2011 Bank of America According to Note 4—Derivatives, Bank of America had legally enforceable master netting agreement that would reduce both derivative assets and derivative liabilities by the same amount of 1,749. 9 million, respectively. Moreover, cash collateral was applied to net off derivative assets by 58. 9 million and derivative liabilities by 51. 9 million, respectively. However, the reduction caused by cash collateral wouldn’t affect total assets and total liabilities. If Band of America were to adopt IFRS, it would report higher gross derivative assets and liabilities by an increase of 1,749. million. However, the adjustment (1,749. 9 million) was insignificant compared to Bank of America’s total asset base (2,129,046 million, about 0. 08%). Therefore, the leverage ratio would only increase slightly due to this change, from 8. 25 under GAAP to 8. 26 under IFRS. Comparable banks J. P. Morgan Chase’s gross derivative assets were offset by 1,710,525 million netting ad justments and gross derivative liabilities by 1,710,523. Such adjustments almost made up of 75% of Chase’s total asset base which is 2,265,792 million. Therefore, if to adopt IFRS, Chase would record a much higher assets and liabilities up to 3,976,317 million and 3,792,742 million, respectively. Leverage ratio, accordingly, would rise from 11. 34 to 20. 66, with an almost doubled increase. Citi Group’s netting adjustments of 875,592 million against derivative assets made up 46. 7% of total assets, and 870,366 million against derivative liabilities made up 33. 9% of total liabilities. When adopting IFRS, Citi would report a higher assets and liabilities, with its leveraging ratio growing from 9. 44 to 13. 88 due to the significant amount of the netting adjustments. Analysis of the impact From the above table, we can see that Bank of America was merely affected by the presentation of netting financial instruments, while the other two banks were greatly affected in terms of leverage ratio. The main reason to such a distinguished difference is that Bank of America had the smallest investment in derivative instruments, compared to Chase and Citi. The gross approach would definitely give a more comprehensive picture of banks’ derivative instruments; however, it would overstate risk to some extent. Market risk of the derivative positions can be better evaluated using the gross presentation which is more detailed. Firstly, net figures are by far more relevant metrics than the gross amounts. Naturally, this comes about from looking to the way that derivatives are traded under an enforceable master netting agreement. The master netting agreement allows for the aggregation of all trades and the replacement by a single net amount. Secondly, another metric to measure derivative portfolios is volatility which is driven by the risk of open market positions and the potential changes in net asset values and not the size of gross derivatives amounts. Therefore, gross balance sheet amounts are not particularly useful indicators of how much net derivative asset values would have to change before solvency is affected. Finally, as the third most important metric when evaluating the risks, collateral together with cash settlement procedures results in a liquidity profile that is more aligned with net presentation. Collateral amounts further reduce the risks and have to be taken into consideration for reporting derivatives Fair Value Accounting for Financial Instruments Fair value accounting From table 5 and the three computation tables in Appendix, we can see that under Full Fair Value method, Bank of America’s net income would grow from 1,446 million to 2,750 million, an increase of 90. 2%. Similarly, Citi would experience an increase of 128. 2% in net income from 11,067 million to 25,257 million. However, full fair value method had insignificant impact on Chase, with a total adjustment of 1,773 million compared to its pre-adjustment net income of 18,976 million. In millions| Bank of America| JP Morgan Chase| Citi Group| Adjustments for assets and liabilities at HC on balance sheet| 6,127 | 1,140 | 12,000 | Adjustments for assets and liabilities at FV on balance sheet with gains and losses in OCI| -4,819 | 633 | 2,190 | Total adjustment| 1,308 | 1,773 | 14,190 | Net income as per financial statements| 1,446 | 18,976 | 11,215 | Full fair value income with information available| 2,754 | 20,749 | 25,405 | * Table 5 Summary of the Fair Value Income Another thing to note is that BOA stands out as it had a significant unrealized loss of 4,819 million on AFS, while its comparable banks, Chase and Citi, had a positive gain of 633 million and 2,190 million, respectively. Based on our analysis, such difference was driven by the following factors. (1). According to its disclosure, Bank of America recognized $299 million of other-than-temporary impairment (OTTI) losses in earnings on AFS debt securities in 2011 compared to $970 million on AFS debt and marketable equity securities in 2010, which contributes greatly in such a large amount of unrealized loss on AFS. The recognition of OTTI losses on AFS debt and marketable equity securities is based on a variety of factors, including the length of time and extent to which the market value has been less than amortized cost, the financial condition of the issuer of the security including credit ratings and any specific events affecting the operations of the issuer, underlying assets that collateralize the debt security, other industry and macroeconomic conditions, and management’s intent and ability to hold the security to recovery. (2). According to its disclosure, Bank of America presents debt securities purchased for longer term investment purposes which are as part of asset and liability management (ALM) and other strategic activities, as available-for-sale (AFS) securities, and report these securities at fair value with net unrealized gains and losses included in accumulated OCI. In 2011, the fair value of net ALM contracts decreased $7. 9 billion to a gain of $4. 7 billion, compared to $12. 6 billion in 2010. The decrease was primarily attributable to changes in the value of U. S. dollar-denominated pay-fixed interest rate swaps of $9. billion, foreign exchange contracts of $1. 8 billion and foreign exchange basis swaps of $1. 4 billion. The decrease was partially offset by a gain from the changes in the value of U. S. dollar-denominated receive-fixed interest rate swaps of $6. 6 billion. Opinions about fair value accounting Fair Value Accounting has many advantages and disadvantages as listed below. FVA advant ages include the following: FVA depicts a clearer picture of the company’s financial situation, as it provides an accurate asset and liability valuation as the prices are reflected in the market price. Fair value accounting limits managers’ ability to manipulate the reported net income, as the gains and losses are reported in the period they occur, not when they are realized as the result of a transaction. For Level 1 2, the price for financial instruments, are available in a liquid market. While under amortized accounting method, firms can manage their income through the selective realization of cumulative unrealized gains and losses on positions, an activity referred to as gains trading. FVA provides investors with more accurate, timely, and comparable financial information versus other alternative accounting approaches, even during extreme market conditions. Gains losses resulting from changes in fair value estimates indicate economic events that companies and investors may find worthy of additional disclosures. Under amortized accounting, income typically is persistent for as long as firms hold positions, but becomes transitory when positions mature or are disposed of and firms replace them with new positions at current market terms. Disadvantages of FVA include: The price for certain assets and liabilities may fluctuate often, resulting in higher volatility than other accounting methods. When the market is volatile, the price for financial instruments may change a lot, so companies may recognize gains/losses. This volatility of earnings would make it more difficult for users to predict future performance and make regulatory capital ratio vary dramatically across periods. A solution for this disadvantage is regulatory capital should be delinked from fair value and reported by using historic cost information. After the market stabilizes, the price may change back to the normal level. Not every asset or liability can be easily fair valued. For financial instruments in level 3, there is no fair value in the liquidity market. Managers need model to estimate the value of financial instruments in level 3. Using fair value accounting may have adverse effect on a down market. Companies may sell some financial instruments whose value decreased because of the drop in the current market price. They may not realize the drop without the fair value accounting. The market may stabilize over time, and the price for the financial instruments will return to their normal level. Another issue with fair value accounting is that when the market for instruments freezes up and there’s no liquidity in the market, financial instruments would have to be valued by using mark-to-model which in many situations are not reliable and transparent to investors. A solution to this is that regulators provide more specific guidance on how to determine fair value for financial statements. Disclosure requirements would include disclosure of fair value of all financial instruments along with method adopted to determine fair values, any significant assumptions used in their estimation, some indications of the sensitivity of the estimated fair value to these assumptions, and discussion of risk exposure and issues associated with the estimation of fair value. In addition, fair value accounting has very significant feedback effects, especially during financial crisis. Fair value accounting would further contribute to the deterioration in the value of a company’s financial instruments or assets and make it more difficult for companies to recover from the crisis. Recommendation here is that in special situations, regulators would allow companies that face severe crisis to adopt other accounting methods temporarily and minimize the loss of these companies. In summary, fair value has both advantages and disadvantages under today’s economy. FVA provides better insight of the financial statements, in ddition to limiting the potential for manipulation. However, in my opinion, under today’s economy situation, it is hard to fully implement the fair value accounting. Every disadvantage has proposed solutions to resolve the issues identified. Overall, FVA is recommended for use. Interest Rate Risk and Net Interest Earnings Net interest margin The net interest yield on a FTE basis was 2. 48 percent for 2011 compared to 2. 78 percent for 2 010. Net interest income on a FTE basis decreased $7. 1 billion in 2011 to $45. 6 billion. The decline was primarily due to: (1). There’s a noticeable decrease in the yield on consumer loans from 6. 04% in 2010 to 5. 37% in 2011, which reduces net interest income by about 4,244 million (633,507 million * 0. 57%). * Debt securities and residential mortgage mainly contributed to the decline. The yield rate for debt securities decreased from 3. 66% to 2. 85%, and the residential mortgage from 4. 78% to 4. 18%. (2). Noninterest income declined from the previous year due to lower mortgage banking income, reflecting$11. 6 billion in representations and warranties costs and decline of $3. billion income from trading account profits. Noninterest income being the major source of Bank of America’s income drastically impacts the profitability of the company. (3). In 2011 Bank of America had a decreased investment security yields, including the acceleration of purchase premium amortization from an increase in modeled prepayment expectations, and increased hedge ineffectiveness. (4). Bank of America’s d eclining net interest margin was partially offset by ongoing reductions in its debt footprint and lower rates paid on deposits. The total U. S interest-bearing deposits had an average yield of 0. 36%, compared to 0. 55% in 2008. Such downward trend in net interest margin can be observed in other banks as well. The following table presents total interest-earning assets rate and total interest-bearing liabilities for all three banks over 2009 to 2011. As shown, all banks experienced a decline in interest-earning assets rate over three years: 1) BOA from 4. 31% in 2009 to 3. 65% in 2011, with an average decrease of 8% every year; 2) Chase from 4. 04% to 3. 1%, with an average decrease of 6. 8%; 3) Citi from 4. 78% to 4. 27%, with an average decrease of 5. 5%. The main reasons for the other two banks’ declining net interest margin were higher deposit balances with lower loan yields. | Bank of America| JP Morgan Chase| Citi Group| | 2011| 2010| 2009| 2011| 2010| 2009| 2011| 2010| 2009| Total interest-earning assets rate| 3. 65%| 4. 02%| 4. 31%| 3. 51%| 3. 83%| 4. 04%| 4. 27%| 4. 55%| 4. 78%| Total interest- bearing liabilities| 1. 39%| 1. 39%| 1. 77%| 0. 86%| 0. 84%| 1. 02%| 1. 63%| 1. 61%| 1. 3%| Table 6 Net Interest Margin of Three Banks Interest rate risk BOA’s net interest income decreased by $2,122 million in 2011 and $998 million in 2010 from a 1% downward parallel shift in interest rate. 1% downward change in interest rate results in a bigger decrease in net interest income in 2011 than in 2010. However, according Chase’s 10K, downward 100bps parallel shocks result in a Federal Funds target rate of zero and negative three- and six-month treasury rates. The earnings-at-risk results of such a low-probability scenario are not meaningful. For Citi, a 100 bps decrease in interest rates would imply negative rates for the yield curve, so not meaningful either. 1% downward shift| 2011| 2010| BOA| ($2,122)| ($998)| JP Morgan Chase| NM| NM| Citi Group| NM| NM| Table 7 The Impact of 1% downward shift on Net Interest Income BOA’s net interest income would increase by $1,505 million in 2011 and $601 million in 2010 from a 1% upward parallel shift in interest rate. The same as downward change, 1% upward change in interest rate also would result in a bigger increase in the net interest income in 2011 than in 2010. Compared with BOA, 1% upward shift in interest rate has a bigger impact for Chase and smaller impact for Citi. 1% upward shift| 2011| 2010| Bank of America| $1,505 | $601 | JP Morgan Chase| $2,326 | $1,483 | Citi Group| $97 | ($105)| Table 8 The Impact of 1% Upward Shift on Net Interest Income Credit Risk and Losses Main loss reserve adequacy ratios Policy to designate past due loans as non-performing Adequacy of the bank’s allowance for loan losses Disclosure policies relating to loans Appendix BOA In $ millions| 2011| 2011| 2010| 2010| 2011| 2010| 2011| ? | Carrying Value| Fair Value| Carrying Value| Fair Value| CURG| CURG| URG| Adjustments for assets and liabilities at HC on balance sheet| Assets:| ? | ? | ? | ? | ? | ? | ? | Held-to maturity debt securities| 35,265 | 35,442 | 427 | 427 | 177 | – | 177 | Loans| 870,520 | 843,392 | 876,739 | 861,695 | (27,128)| (15,044)| (12,084)| Total assets| 905,785 | 878,834 | 877,166 | 862,122 | (26,951)| (15,044)| (11,907)| Liabilities:| ? ? | ? | ? | ? | ? | ? | Deposits| 1,033,041 | 1,033,248 | 1,010,430 | 1,010,460 | 207 | 30 | 177 | Long-term debt| 372,265 | 343,211 | 448,431 | 441,672 | (29,054)| (6,759)| (22,295)| Total liabilities| 1,405,306 | 1,376,459 | 1,458,861 | 1,452,132 | (28,847)| (6,729)| (22,118)| Pretax adjustments before AFS securities and CFH derivatives| ? | ? | ? | ? | 1,896 | (8,315)| 10,211 | Aftertax adjustments before AFS securities and CFH derivatives| ? | ? | ? | ? | ? ? | 6,127 | Adjustments for assets and liabilities at FV on balance sheet with gains and losses in OCI? | Aftertax adjustment for AFS securities| ? | ? | ? | ? | ? | ? | (4,270)| Aftertax adjustment for CFH derivatives| ? | ? | ? | ? | ? | ? | (549)| Total adjustment to net income| ? | ? | ? | ? | ? | ? | 1,308 | Net income as per financial statements| ? | ? | ? | ? | ? | ? | 1,446 | Full fair value income with information available| ? | ? | ? | ? | ? | ? | 2,754 | JP Morgan Chase In $ millions| 2011| 2011| 2010| 2010| 2011| 2010| 2011| ? | Carrying Value| Fair Value| Carrying Value| Fair Value| CURG| CURG| URG| Adjustments for assets and liabilities at HC on balance sheet| Assets:| ? | ? | ? | ? | ? | ? | ? | Loans| 696,100 | 695,800 | 660,700 | 663,500 | (300)| 2,800 | (3,100)| Other| 66,300 | 66,800 | 64,900 | 65,000 | 500 | 100 | 400 | Total assets| 762,400 | 762,600 | 725,600 | 728,500 | 200 | 2,900 | (2,700)| Liabilities:| ? | ? | ? | ? | ? | ? | ? | Deposits| 1,127,800 | 1,128,300 | 930,400 | 931,500 | 500 | 1,100 | (600)| Accounts payable and other liabilities| 167,000 | 166,900 | 138,200 | 138,200 | (100)| – | (100)| Beneficial interests issued by consolidated VIEs| 66,000 | 66,200 | 77,600 | 77,900 | 200 | 300 | (100)| Long-term debt and junior subordinated deferrable interest debentures| 256,800 | 254,200 | 270,700 | 271,900 | (2,600)| 1,200 | (3,800)| Total liabilities| 1,617,600 | 1,615,600 | 1,416,900 | 1,419,500 | (2,000)| 2,600 | (4,600)| Pretax adjustments before AFS securities and CFH derivatives| ? | ? ? | ? | 2,200 | 300 | 1,900 | Aftertax adjustments before AFS securities and CFH derivatives| ? | ? | ? | ? | ? | ? | 1,140 | Adjustments for assets and liabilities at FV on balance sheet with gains and losses in OCI| Aftertax adjustment for AFS securities| ? | ? | ? | ? | ? | ? | 1,067 | Aftertax adjustment for CFH derivatives| ? | ? | ? | ? | ? | ? | (279)| Cash flow hedge| ? | ? | ? | ? | ? | ? | (155)| Total adjustment to net income| ? | ? | ? | ? | ? | ? | 1,773 | Net income as per financial statements| ? | ? | ? | ? | ? | ? | 18,976 | Full fair value income with information available| ? ? | ? | ? | ? | ? | 20,749 | Citi Group In $ millions| 2011| 2011| 2010| 2010| 2011| 2010| 2011| ? | Carrying Value| Fair Value| Carrying Value| Fair Value| CURG| CURG| URG| Adjustments for assets and liabilities at HC on balance sheet? | Assets:| ? | ? | ? | ? | ? | ? | ? | Investment| 293,400 | 292,400 | 318,200 | 319,000 | (1,000)| 800 | (1,800)| Loans| 614,600 | 603,900 | 605,500 | 584,300 | (10,700)| (21,200)| 10,500 | Total assets| 908,000 | 896,300 | 923,700 | 903,300 | (11,700)| (20,400)| 8,700 | Liabilities:| ? ? | ? | ? | ? | ? | ? | Deposits| 865,900 | 865,800 | 845,000 | 843,200 | (100)| (1,800)| 1,700 | Long-term debt| 323,500 | 313,800 | 381,200 | 384,500 | (9,700)| 3,300 | (13,000)| Total liabilities| 1,189,400 | 1,179,600 | 1,226,200 | 1,227,700 | (9,800)| 1,500 | (11,300)| Pretax adju stments before AFS securities and CFH derivatives| ? | ? | ? | ? | (1,900)| (21,900)| 20,000 | Aftertax adjustments before AFS securities and CFH derivatives| ? ? | ? | ? | ? | ? | 12,000 | Adjustments for assets and liabilities at FV on balance sheet with gains and losses in OCI| Aftertax adjustment for AFS securities| ? | ? | ? | ? | ? | ? | 2,360 | Cash flow hedge| ? | ? | ? | ? | ? | ? | (170)| Total adjustment to net income| ? | ? | ? | ? | ? | ? | 14,190 | Net income as per financial statements| ? | ? | ? | ? | ? | ? | 11,215 | Full fair value income with information available| ? | ? | ? | ? | ? | ? | 25,405 | How to cite Financial Analysis of Bank of America, Essay examples