This book is an authoritative guide to the accounting and disclosure rules for financial institutions and instruments. It provides guidance from a “fair value” perspective and demonstrates the simplest and most natural measurement basis for reporting financial instruments, as is relevant for thrifts, mortgage banks, commercial banks, and property-casualty and life insurers.
Preface ix
Acknowledgments xvii
Chapter 1 Financial Instruments and Institutions 1
Main Ingredients of the Analysis of Financial Instruments 4
Activities and Risks of Financial Institutions 11
Valuation of Financial Institutions in Practice 16
Chapter 2 Nature and Regulation of Depository Institutions 19
Activities of Depository Institutions 19
Bank Regulation 22
Bank Subtypes 35
Recent Trends 38
Chapter 3 Thrifts 45
Financial Statement Structure 46
Main Risk-Return Trade-Offs and Financial Analysis Issues 56
Chapter 4 Interest Rate Risk and Net Interest Earnings 63
Views of Interest Rate Risk 64
Interest Rate Risk Concepts 66
Analysis of Net Interest Earnings 78
Rate-Volume Analysis 81
Repricing Gap Disclosures 84
Chapter 5 Credit Risk and Losses 93
Economics of Credit Risk 95
Accounts for Loans and Loan Losses 97
Accounting and Disclosure Rules for Unimpaired Loans 100
Accounting and Disclosure Rules for Impaired Loans 107
Loan Portfolio Quality and Loan Loss Reserve Adequacy 110
Research lSÑ
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