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Overview

Co-taught with Professor Stephen Ryan

Fall 2022, Half Semester Starting Wednesday 6-9 PM, September 22, 2022. We will teach this course in person, but we will also turn on Zoom and record the class. You are encouraged to attend in person unless of you have special circumstances.

MBA ACCT-GB-3120 (1.5 credits) specialization: Accounting

Undergrad ACCT-UB-20 (2 credits) concentration: Accounting

This course analyzes financial statements of financial institutions from the perspective of investors, bankers, and consultants. It provides a framework to identify, understand, and analyze key performance metrics of banks.

Takeaways

Prerequisites

Core course in Financial Accounting

Materials

We will not require a textbook. We will distribute materials in class. We will go through several financial statements in class. Some of the key companies are listed below:

Attendance and penalty for missing classes

Requiring attendance is necessary for several reasons. First, many of you misjudge how much you miss out on learning when you miss classes. It is difficult to catch up once you miss a class. Watching a video (if available) is inadequate as it is cognitively far inferior to paying attention in a classroom. Second, less than 25% of the students who miss a class watch the video (if available). As a result, they are lost in subsequent classes, which provides wrong signals to me as an instructor. Third, there is diminished classroom interaction and poorer quality of class discussion if you are absent. Fourth, you do not get enough feedback if you do not work through the questions I pose in class. Fifth, I lose the feedback on how much you are learning with fewer questions in class.

The policy below will be in effect only after the add/drop period.

Without mandatory attendance, as much as half the class can be absent. Therefore, though I dislike doing this, I penalize absences. I understand that there are valid reasons for absences. If you anticipate being absent for good reasons, please email me well in advance. You can enter "Excused" on the attendance sheet described below to avoid the penalty if I approve. If you miss a class due to emergencies and cannot tell me in advance, do not panic. Take care of the emergency first and then email me. I will permit you to change the "absent" to "excused." But, if you miss a class without a valid reason, there is a penalty, as shown below.

For sections meeting in 150-190 minute sessions, you would lose one grade (A to A-, A- to B+, B+ to B, B to B-, and so on) for EVERY missed session unless you were explicitly excused via email. Thus, if you miss two class sessions, you would lose two grades, and so on.

For sections meeting in 75-80 minute sessions, you would lose one grade (A to A-, A- to B+, B+ to B, B to B-, and so on) for EVERY TWO missed sessions unless you were explicitly excused via email. Thus, if you miss four class sessions, you would lose two grades, and so on.

Please sit in the same seat in every class and display your name tags. After entering the class, please mark yourself present in the first 20 minutes in the OneDrive sheet (link posted on OneDrive after the add/drop period is over.) You will be marked absent if you are more than 20 minutes late unless it is because of factors beyond your control (traffic, subway, interviews running late). You will also be marked absent if you leave the class early unless you have my permission or get it afterward. You will get an F in the course if you are caught cheating on the attendance sheet.

Exams and Grading

There are no in-class quizzes or midterms. There is take-home final exam.

System Requirements

Help and Office

Assignments

Topics

Topic 1: An introduction to modeling and analyzing a bank

Unique aspects of a bank's business model

Balance sheet

Income statement

Topic 2: Transactions and Basic Valuation Metrics for a Bank

Simple Transactions for a Bank

Balance sheet metrics

Income statement metrics

ROI and valuation metrics

Topic 3: Technical concepts

Loan and Bond Amortization

Credit risk

Debt securities

Interest rate risk

Inflation and exchange rates

Topic 4: Analyzing real financial statements (Wells Fargo 2020 report)

Topic 5: Analyzing real financial statements (Wells Fargo 2020 report)

Topic 6: Structured transactions and off-balance-sheet financing

Special purpose entities

Securitization

Derivatives