- In this project, you will analyze two bank holding companies: Citigruop (Citi) and Western Alliance Bancorporation (WAL). Citi is one of the largest bank holding companies in the world, while WAL is a considerably smaller financial institution. I deliberately chose the companies of such different sizes to demonstrate the differences in the balance sheet composition, sources of revenues, involvement in the off-balance sheet activities etc. Also you will see that a bank does not have to be very large to perform well.
2.Go to the website of the National Information Center (http://www.ffiec.govinicpubweb/nicweb/nichome.aspx). Then go to "Institution Search" and enter "1951350" for institution's RSSD ID. Click on "Submit". Choose "Citigroup" (ID 1951350). Then choose "Consolidated Financial Statements for BHCs (FR Y-9C)" for 2018-12-31. Click on "Create Report" and save a PDF file on your computer. Then repeat the same procedure to download reports for 2017-12-31, 2016-12-31, 2015-12-31, 2014-12-31. Save all the files on your computer. Then repeat the above procedure for the "Western Alliance Bancorporation" (ID 2349815). Now you have 5-year financial statements for two companies
3.Analyze capital adequacy of two BHCs. To do this, compare the total risk-based capital ratio (Schedule HC-R, item 33) and tier 1 leverage ratio (Schedule HC-R, item 31) across the companies and across the time. Note that according to Prompt Corrective Action guidelines a bank is considered under-capitalized if its total risk-based capital ratio is less than 8%, or its tier 1 leverage ratio is less than 4%. What can you say about relative capital adequacy of the two BHCs? Which BHC was better capitalized over the 5-year period? Did any of the two BHCs get dangerously close to hitting minimum regulatory capital thresholds?
Sample Solution