Bank Analysis School September 2023 - Presentations & Resources

Internal Use Only

Securities Review – May 2022 Exam

Five-fold increase in Corporate bonds since the last exam (Q1 2019)

• Corporate bonds rated either subinvestment or lowest investment grade represented nearly 200% of capital. • Weak investment practices (policy, pre-purchase analysis, ongoing monitoring). • Asset Quality, Capital, and Management components were downgraded.

Internal Use Only

Management was Reaching for Yield since Risk Free Rates were Extremely Low

6.0%

5.0%

4.0%

3.0%

4/30/2021

Yield

1.65%

2.0%

4/30/2020

0.64%

1.0%

1m 2m 3m 6m 1y

2y

3y

5y

7y

10y

20y

30y

Maturity