Flip your modeling knowledge upside down. For banks, it’s BS first, then IS.
Evaluate interest rate term structures and asset-liability duration matching.
Model out relevant capital requirements to account for potential catastrophe.
Financial professionals with exposure to this industry, such as:Bankers Research Analysts Advisors Asset Managers Internal Corporate Finance Professionals
… and anyone fed up with the Fed, who needs to adapt to a changing interest rate environment.
Take a broad overview of the 3 main banking functions, and understand what Tier I, Tier II, and Basel II mean.
In short: What makes a bank so unique to analyze?
Step into the world of banking financial statements: Net Interest Income Margin, special Balance Sheet items, and key valuation multiples.
Develop the logic of loan losses and provisions, especially how they impact everything else.
Identify critical credit ratios and capital adequacy metrics - including all the nuances and ways to game them.
These will play a central role in any bank model.
Analyze internal profitability ratios to measure the bank’s core performance.
Walk through the proper calculation of multiples used in the banking industry.
Take your pick: Basic, Intermediate, or Advanced.
Believe us when we say the rabbit hole gets quite deep.
Our approach is to teach you how to fish, rather than give you a fish.
We don't give a one-way lecture where you memorize every cell and formula.
We nudge you toward uncovering answers on your own by leading with the right questions.
The end result? Longer-term knowledge retention that will last an entire career.
I really felt that WST was world class and would recommend it to anyone starting a new career on Wall Street. In particular, the strength of the program is that it concentrates on how analytical work is actually conducted in real life rather than the academic approach of some other competitors.
Balance sheet based companies, such as banks, play by different rules and methodologies based on the unique nature of their business. Focus is placed on our Commercial Banks financial statements primer which dives deep into a bank’s unique financial statement terminology and drivers. Understand how to analyze a bank and why the standard financial analysis and valuation methodologies that apply to most companies do not apply to industries that “use money to make money”. Start with a brief overview of the main banking functions (commercial, investment, asset management) and quickly turn to the quality of book of loans and analysis of net vs gross charge-offs vs provisions, etc. Understand the critical credit ratios and capital adequacy analysis as well as Tier 1 and II definitions and Basel II impact. Crystallize the impact of Interest Rates, importance of term structure and credit spreads and implications on a bank’s profitability. Examine best practices in calculating net interest income via average asset and liability balances on the income statement. Dive into an analysis of Balance Sheet assets & liabilities and articulate the drivers of EPS growth. Wrap up by analyzing valuation parameters: key banking valuation multiples (PE, PEG, Book Value, ROE).
2.5 hours / 4 hours
Build a basic, streamlined bank financial model that builds upon the bank terminology in our Bank Industry Primer course. Before diving deep into the complex nuances of our Advanced Bank Financial Model, really solidify your understanding of developing the logic in loan losses and provisions and its impact on the rest of the larger bank financial statements. Perform quick back-of-the-envelope calculations for key Balance Sheet items such as Interest Earning Assets and Interest Bearing Liabilities, which yield Net Interest Income. Estimate and calculate capital adequacy ratios to wrap up your summary simplified basic bank model.
2 hours / 3 hours
Construct a more robust bank financial model by building a bank balance sheet and derived income statement. Project gross loan balance, provisions for credit losses, gross charge-offs, recoveries, net charge-offs, net loan balance based on important key trends and ratios. Predict the critical funding requirements on the liability side of the balance sheet to support the loans and asset side. Learn the techniques and best practices to balancing the bank model. Examine different techniques to estimate the crucial interest-earning assets and interest-bearing liabilities. Estimate asset yield, funding costs and net interest spread to minimize forecasting error. Identify line items that constitute non-interest fee revenue beyond using simple percent growth rates. Incorporate and integrate provision for credit losses. Calculate compensation and overhead expenses and leave with a completed balance sheet and income statement. Make sure you master the concepts in this Intermediate class before diving into our Advanced Bank Financial Modeling course.
2 hours / 3 hours
The standard financial analysis and valuation methodologies that apply to most companies do not apply to industries that “use money to make money”. Balance Sheet based companies, such as banks, play by different rules and methodologies based on the unique nature of their businesses. First, start off with an interactive primer on commercial banks and their financial statement terminology and drivers. Then, build a fully integrated bank financial model that addresses the key drivers of profitability, cash flow, and valuation. Focus is placed on: projecting the Balance Sheet line items which drive the entire model; estimating interest-earning assets and interest-bearing liabilities which drives profitability; projecting loan portfolio growth, provisions for credit losses, and net charge-offs which determine overall impact on the financial statements. Complete the model by projecting different fee revenue sources and integrating the Cash Flow Statement. Finish the model by calculating and analyzing capital adequacy ratios, financial performance indicators and valuation metrics.
5 hours / 9 hours