Bank Analysis School eBook

Internal Use Only

Is Oversight of Interest Rate Risk Adequate for the Size and Risk Profile of the Bank?  Policy and risk limits  Earnings forecasted over at least a two-year period  Static earnings simulation  Economic value of equity modeled  Range of severe scenarios (e.g., 400 basis points, non-parallel)  Stress testing of critical assumptions  Document key assumptions  Independent review  Back-testing

Internal Use Only

How Would You Rate STMR at Sunny State Bank?

Earnings & Capital

Position Asset/liability mismatch

Risk Management Practices

Sensitivity Rating