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Fundamentals of Bank Credit Analysis

Produced by the Knowledge Center, expert training from S&P Global Market Intelligence

In this two-day seminar, you'll learn how to evaluate the health of banking institutions and anticipate declines or improvements in the creditworthiness of bank subsidiaries, bank holding companies, and credit unions. We'll mix traditional lecture methods with group discussion and case studies to provide an interactive, high-energy learning experience. Working in small teams, you'll apply the analytical tools you've acquired in the class through case studies to develop CAMELS ratings for real banks using current data.

Learning Objectives

  • Produce a credible, independent evaluation of an institution's creditworthiness and solvency applicable to investment, lending and acquisition decisions
  • Generate qualitative and quantitative assessments of a financial institution using a CAMELS framework
  • Evaluate management actions and their impact on a firm's performance
  • Determine the quality and adequacy of capital by analyzing various capital ratios
  • Measure the credit risk inherent in a depository institution's loan book
  • Assess the sources and quality of funds underlying key liquidity ratios
  • Synthesize your analysis to separate strong institutions from those with deteriorating credit

This program presumes familiarity with depository institutions accounting and finance concepts, as well as a working knowledge of financial institutions’ income statements and balance sheets. soft Excel.


Bill Nayda, PhD

Principal, Second Pillar Consulting

Dr. Nayda and his team assist banks with risk management initiatives including: Enterprise Risk Management, balance sheet strategy, regulatory exams and relations, capital planning and adequacy, Basel II and III, interest rate risk, portfolio valuation and due diligence, risk based profitability, and model validation.During the financial crisis, the firm was instrumental in working with several of the newly formed BHC's to become regulated banks. Clients range from top-5 banks to regional and community institutions. The firm has a focus on education, working with boards and management to help them better understand and own the bank's risk. SPC consultants frequently publish in the area of risk management and are interviewed and quoted in many banking periodicals.Dr. Nayda's almost 20 years of banking and insurance experience is focused on risk management, regulatory compliance, corporate governance and structure, and risk-based pricing. Prior to founding Second Pillar Consulting, he spent ten years at Capital One overseeing balance sheet strategy, economic capital, regulatory relations and pricing models. He has also helped model and manage enterprise risk at Travelers companies and Allied Irish Bank's U.S. subsidiary.He received his PhD in Economics from Texas A&M University and his B.A. in Economics from Rutgers University. While at Texas A&M, Dr. Nayda conducted economic research into the impacts of global warming under Bruce McCarl who was a recipient of the Nobel Peace Prize for his research on climate change.

Fundamentals of Bank Credit Analysis Agenda

MONDAY, May 8th
08:00 am
Registration and Continental Breakfast:
08:30 am
Introduction and Overview:

What is risk?

Why banks fail

Fundamental analytical concepts:

  • ● Qualitative and quantitative analyses
  • ● Trend and peer analyses
  • ● Macro and micro analyses
10:15 am
Financials and Metrics for Depository Institutions:
  • ● Understanding financial statements
  • ● Understanding loan loss accounting
  • ● The fundamental ratios
10:45 am
Earnings and Profitability (with case study: Developing an earnings rating):
  • ● Sources of revenues and components of earnings: net interest margin, fees and commissions, trading profits
  • ● Quality of earnings and performance risk: core versus non-core, operating expense trends, extraordinary events
  • ● Earnings ratios and measures: return on average assets, return on average equity, net interest margin, fee income, efficiency ratio
  • ● Assessing earnings quality and identifying red flags: excessive growth, over-concentration, volatile earnings sources, and asset and liability mismatches
  • ● Symptoms of deteriorating credit standing: financial, non-financial and market indicators
12:00 pm
01:00 pm
SNL Product Demonstration:
01:30 pm
Asset Quality (with case study: Developing asset quality ratings):
  • ● What is asset quality?
  • ● Quantitative analysis of asset quality and key ratios
  • ● Asset mix by type: low risk assets, government paper and inter-bank deposits, higher risk loans and investment securities, off balance sheet items, and credit derivatives
  • ● Individual asset considerations: size, maturity structure, book versus market value, economic sector, collateral, member base and concentration
  • ● Loan portfolio management: monitoring and analysis, problem loan characteristics, adequacy of loan loss provision versus charge-offs
  • ● Indicators of risk appetite
02:45 pm
Capital (with case study: Developing a capital rating):
  • ● Composition and quality of capital: reported book equity, adjusted common equity, hybrid capital, economic versus regulatory capital
  • ● Sources of capital: earnings, asset valuation, capital raising
  • ● Risk-weighted assets: Tier One and Tier Two capital
  • ● Basel expectations
  • ● Key ratios: Tier One and total capital, leverage, tangible common capital, double leverage
05:00 pm
Day One Concludes:
TUESDAY, May 9th
07:30 am
Continental Breakfast Opens:
08:30 am
Liquidity (with case study: Developing a liquidity rating):
  • ● Funding stability and liquidity
  • ● Managing and evaluating liquidity
  • ● Composition of funding sources
  • ● Internal reserves as a source of liquidity and funding
  • ● Ability to access various funding markets and raise capital from private and public sources
  • ● Liquidity facilities at central banks
  • ● Possibility of support from government or private shareholders
  • ● Key liquidity ratios
10:15 am
  • ● Corporate governance and the hierarchy of risk management
  • ● Risk appetite: linking vision and mission to strategy execution
  • ● Qualitative nature of management evaluation and red flags
  • ● Enforcement actions as a measure of management performance
12:00 pm
01:00 pm
Additional Analytical Considerations:
  • ● Evaluating an institution’s ability to weather periods of stress
  • ● Lessons from the government’s stress test
Interest rate risk management
  • ● Monitoring and controlling exposure
Modeling credit risk factors
02:30 pm
Case study exercise: Developing a Rating and Conclusions:
Consolidating multiple analyses to develop a comprehensive assessment of an institution's creditworthiness
04:30 pm
Program Concludes:

Ticket Info

Early Bird Rate:
$1,995 (through March 24)

Regular Rate: $2,195


Event location

Fee includes all program materials and continental breakfast and lunch both days.

Group pricing discounts and in-house options are available.

Downloads & FAQs

Banking Sector Training Course Catalog

Download our - Justification Letter: Bank Credit Analysis

Who attends?

  • Bank and credit union corporate finance professionals
  • Corporate development professionals
  • Investor relations professionals
  • Investment banking analysts, associates
  • Credit union analysts and associates
  • Banking regulators and staff
  • Advisors to financial institutions
  • Buy- and sell-side sector analysts
  • Credit analysts
  • Private equity investors

Can credit unions attend this program?

Absolutely. This program is open to anyone who works with or for any type of depository institution. Materials assume an understanding of basic depository institution accounting and finance concepts, and presumes a working knowledge of financial institutions' income statements and balance sheets.

What is the dress code?

Business casual.

Do I need a laptop?

Participants will need to bring a laptop computer equipped with Microsoft Excel.

Is there required pre-reading?

While there is no required pre-reading, we do send case study materials electronically in advance of the class. These are generally financial highlights, investor presentations, and SEC filling excerpts of the case study subject intended to familiarize you with the their fundamentals (size, geography, strategy, financial performance, etc.). Feel free to show up "cold"; however, participant familiarity with these banks' fundamentals prior to class allows the instructor to spend less time summarizing the basics and more time discussing nuanced issues.

What is the cancellation policy?

Cancellations for this program are eligible for a full refund, less a $150.00 administrative fee, if received at least 15 business days prior to the start of the program. Cancellations received after that date but at least 5 business days prior to the start of the program receive a credit in the amount of the registration fee, less a $150.00 administrative fee, to attend another Knowledge Center program within 13 months. Cancellations received fewer than 5 business days prior to the start of the program are not eligible for a refund or credit. Attendee substitutions from the same company may be made at any time.

In the event of a cancellation from a group discount, refunds or credits are issued beginning with the most heavily discounted price, minus a $150.00 administration fee. "No shows" - or those who cancel within 15 days of the program - and have registered under the Invoice option, remain liable for the full program fee.

The Knowledge Center reserves the right to cancel/change programs, content, speakers or venue at any time. The Knowledge Center reserves the right to make portions of the program registration information available to program sponsors. The Knowledge Center will not be held liable for any costs incurred by registrant due to individual registration cancellation.

In the event that a seminar is cancelled due to inclement weather, faculty cancellation or force majeure, the Knowledge Center will refund the registrant's tuition in full, however the Knowledge Center will not be liable for incidental or consequential out of pocket expenses incurred by the registrant. If you have questions regarding the Knowledge Center's refund, complaint or program cancellation policy, please call us at (434) 951-7786.

Registrant, as an individual person attending the Knowledge Center conference, seminar, or other program, hereby grants permission to the Knowledge Center to use and publish his or her image, likeness, or testimonials collected in connection with the program for advertising and trade purposes in connection with the Knowledge Center’s conferences, instructional, and/or marketing activities.

Is this the same course that was offered by the SNL Knowledge Center?

Yes. You're in the right place. SNL Knowledge Center was part of SNL Financial, which was purchased by McGraw Hill Financial Inc. in 2015. In 2016, McGraw Hill Financial -- whose businesses include S&P Dow Jones Indices, S&P Ratings, Platts, and S&P Capital IQ -- changed its name to S&P Global. SNL Financial and S&P Capital IQ were united to be S&P Global Market Intelligence, a division of S&P Global.

We are the Knowledge Center and we continue to bring you essential insights through executive conferences and expert training on behalf of S&P Global Market Intelligence. We remain focused on providing the most timely and relevant content to answer your questions, and draw on even more data, analytics, and sector intelligence from the larger company.

Continuing Education Credits

13 Hours of Continuing Education Credit
The Knowledge Center is registered with CFA Institute as an Approved Provider of professional development programs. This program is eligible for 13 CE credit hours as granted by CFA Institute. If you are a CFA Institute member, CE credit for your attendance at this event will be automatically recorded in your CE Diary upon request.
15 Hours of CPE Credit
Participants who complete this program qualify for 15 hours of CPE credit (Specialized Knowledge and Applications). Program Level: Intermediate. Delivery Method: Group-Live. The Knowledge Center is registered with the National Association of State Boards of Accountancy (NASBA), as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of accountancy have final authority on the acceptance of individual courses for CPE credit. Complaints regarding registered sponsors may be addressed to the National Registry of CPE Sponsors, 150 4th Ave N, Ste 700, Nashville, TN, 37219-2417. Website:
Apr 07, 2016