7.

The liability structure of bank balance sheets tends to reflect a shorter maturity structure than does the asset portfolio with relatively more liquid instruments such as deposits and interbank borrowings used to fund less liquid assets such as loans. Thus, maturity mismatch of interest rate risk and liquidity risk are key exposures concerns for bank managers. 8. Assets ($Millions): Net Loans Investment Securities Cash Other Assets Premises Intangible Assets Federal Funds Sold Total Assets $29,981 $5,334 $2,660 $1.633 $1,078 $758 $110 $41,554

I would classify this as a regional bank due to it having assets worth over one billion dollars and it relies mostly on deposits for liquidity not borrowed or non-deposit funds. 9. OBS activities include various types of guarantees (such as letters of credit), which often have a strong insurance underwriting element, and making future commitments to lend. OBS activities also involve engaging in derivative transactions futures, forwards, options, and swaps. 9a. OBS activities move onto the balance sheet when a contingent event occurs. 9b. When banks move activities off the balance sheet, they hope to earn additional fee income to complement declining margins or spreads on their traditional lending business. At the same time, they can avoid regulatory costs or taxes since reserve requirements and deposit insurance premiums are not levied on off-balance sheet activities. 9c. OBS activities can involve risks that add to the overall insolvency exposure of an FI. 10a. The average annual growth rate in OBS total commitments over the 1992-2009 period was 130.85% 20%. Growth Rate between Given Years 126.43% = (22,814.7010,075.80/10,075.80) 242.03% 126.52% 28.42% 130.85% = Sum of Growth Rates/4

Year 1992 1996

Total OBS Assets $10,075.80 $22,814.70

2003 2007 2009 Average Annual Growth Rate

$78,032.80 $176,763.50 $226,993.00

values 10075.8 22814.7 78032.8 176763.5 226993 AAGR

date 12/31/1992 12/21/1996 12/31/2003 12/31/2007 9/30/2009

Year 0 4 11 15 17

Formula used 20% LOGEST(A2:A6,C2:C6)1 20% RATE(17,0,-A2,A6)

10b. Notional amount of credit derivates (60%) , commitments to buy foreign exchange, spot, and forward, notional value of outstanding swaps (28%), option contracts and commodities (25%), and option contracts on interest rates (21%), are the categories of contingencies have had the highest annual growth rates. 10c. The significant growth in derivative securities activities by commercial banks has been a direct response to the increased interest rate risk, credit risk, and foreign exchange risk exposures they have faced, both domestically and internationally. These contracts offer banks a way to hedge these risks without having to make extensive changes to the balance sheet. 11a. State banking commission, FDIC 11b. State banking commission, FDIC, FRB (all holding companies are regulated by FRB?) 11c. State banking commission, FRB 11d. OCC, FRB (All nationally charted banks are automatically members of FRS page 51, line 2) 11e. OCC, FRB 12. The main features of the 1994 Riegle-Neal Interstate Banking and Branching Efficiency Act are: a) Starting in September 1995, it permitted bank holding companies to acquire banks in other states b) Invalidated the laws of states that allowed interstate banking only on a regional or reciprocal basis. c) Beginning in June 1997, bank holding companies were permitted to convert out-of-state subsidiary banks into branches of a single interstate bank. d) Newly chartered branches also permitted interstate if allowed by state law. The major impact on commercial banking activity that occurred from this legislation was that nationwide branching became possible for the first time in 70 years.