Bank Analysis School

Internal Use Only

Please share one take-away from this session. (Chatstorm)

Internal Use Only

Asset Quality Recap Asset quality problems are the primary cause of most bank failures.

Loans are the largest and riskiest asset category.

The five regulatory classification grades are: Pass, Special Mention, Substandard, Doubtful, and Loss. The Adversely Classified Items Coverage Ratio is the primary ratio used by regulators to measure risk. Underwriting standards and loan administration are critical.

The ALLL is a rainy-day fund to cover potential losses.

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