Assignment requirement: Please complete 1 word doc and answer following questions (which are all posted in this text box) and second complete the American Express on new excel sheet and using the uploaded “people united” example as a guide to mimic it exactly. Income statement, Balance sheet and Ratio is provided in the uploaded “project bank analysis” doc which has further instructions on project. Following questions answer each on word doc. ?Based on your bank’s ratios, what can you say about the stability of your bank? ? What conclusions can you draw about bank? ?How will Basel III impact your bank? ?What does your analysis suggest about leverage ability going forward? dividends? ?Based on the special characteristics of your banks what other things did you consider ? A CAMELs analysis should be included in your commentary. Where do you expect growth to be coming from or in some cases declining? Use the MD&A to identify some of the risks and then develop these in more depth. ?As part of your presentation, I would like you to compare the underlying Components of Profit Margin and then Asset Utilization. What interesting information comes to light when you compare the drivers of profits? Asset Utilization? Do certain banks favor one component and ignore another? (Ratios (5) in the Peoples Financial Model) Choose one and answer Risks- What are the risks that your bank is exposed to? Here a brief examination of the risks discussed A brief commentary of what your bank’s exposure to these risks is required. Choices: Interest Rate Risk (assume Interest Rates rise + 3%) what impact will that have on Assets and on Liabilities. How will this affect the ability of borrowers to repay? Loan Losses and defaults, what will happen here as a result? Credit Risk – Assume we enter into another recession. What have been the average default risks in the major lending segments? Assume defaults rise to 14%. How will that change your ratios? What additional capital injections might that entail in order to meet regulations? See chapter 20 for more information on these risks. Liquidity Risk – Assume two different liquidity shocks (take one). Liability side, depositors demand immediate withdrawal of 20% of funds. Asset side, your bank’s off-Balance Sheet loan commitments (You will need to find these in the notes) have two components, the on-Balance Sheet loans under those commitments and the off-Balance Sheet used commitments. Assume that customers suddenly demand to use 30% of those unused commitments. What will that do to liquidity of the bank? How will they need to respond?