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Financial Services Firms: Governance, Regulations, Valuations, Mergers, and Acquisitions, 3rd Edition

Book Description

Indispensable coverage of new federal regulatory reforms and federal financial issues

An essential guide covering new federal regulatory reforms and federal financial issues

Financial Institutions, Valuations, Mergers and Acquisitions, Third Edition presents a new regulatory framework for financial institutions in the post-bailout era.

  • Provides valuable guidance to assess risks, measure performance and conduct valuations processes to create shareholder value

  • Covers the protection of other stakeholders, including customers, regulators, government, and consumers

  • Offers an up-to-date understanding of financial institutions, their challenges, and their opportunities in the post-Sarbanes-Oxley era

  • Over the past decade, substantial changes have taken place in the structure and range of products and services provided by the financial services industry. Get current coverage of these changes that have transformed both traditional organizations such as banks, thrifts, and insurance companies, as well as securities providers, asset management companies and financial holding companies with the up-to-the-minute coverage found in Financial Institutions, Valuations, Mergers and Acquisitions, Third Edition.

    Table of Contents

    1. Cover
    2. Title Page
    3. Copyright
    4. Dedication
    5. Preface
      1. Highlights of Changes from the Second Edition
      2. Organization of the Book
    6. Acknowledgments
    7. Part I: Financial Services Industry: Its Markets, Regulations, and Governance
      1. Chapter 1: Fundamentals of the Financial Markets and Institutions
        1. Introduction
        2. Financial Markets
        3. Financial Information and Capital Markets
        4. Financial Crisis and Financial Regulatory Reforms
        5. Types and Roles of Financial Markets
        6. Financial Services Firms
        7. Conclusion
      2. Chapter 2: Introduction to Financial Institutions
        1. Introduction
        2. Landscape of the Financial Services Industry
        3. Structural Changes in the Financial Services Industry
        4. Historical Perspective of American Banking
        5. Current Trends in the Financial Services Banking Industry
        6. Regulatory Reforms
        7. Valuation Process
        8. Conclusion
      3. Chapter 3: Corporate Governance
        1. Introduction
        2. Corporate Governance Effectiveness
        3. Global Regulatory Reforms
        4. Sarbanes-Oxley Act of 2002
        5. Dodd-Frank Act
        6. Corporate Governance Functions
        7. Board of Directors and Its Committees
        8. Audit Committee Roles and Responsibilities
        9. Executive Compensation
        10. Conclusion
    8. Part II: The Foundation: Financial Institutions, Valuations, Mergers, Acquisitions, and Regulatory and Accounting Environment
      1. Chapter 4: Overview of the Valuation Process
        1. Introduction
        2. Valuation Services
        3. Valuation Profession
        4. Valuation of the Business
        5. Attracting Valuation Clients
        6. Accepting a Client
        7. Pricing Valuation Services
        8. Importance of the Engagement Letter
        9. Planning an Appraisal Engagement
        10. General Planning
        11. Appraiser's Traits
        12. Appraiser's Due Diligence Process
        13. Risk Assessment
        14. Conclusion
      2. Chapter 5: Overview of Mergers and Acquisitions
        1. Introduction
        2. Historical Perspective of Mergers and Acquisitions
        3. Recent Trends in Mergers and Acquisitions
        4. Regulations of Bank Mergers
        5. Players in Mergers and Acquisitions
        6. Motives for Business Combinations
        7. Determinants of Mergers and Acquisitions
        8. Perceived Shortcomings of Mergers and Acquisitions
        9. Studies on Mergers and Acquisitions
        10. Leveraged Buyout
        11. Post Mergers and Acquisitions Performance
        12. Shareholder Wealth and Effect of Mergers and Acquisitions
        13. Joint Ventures and Strategic Alliances
        14. Ethics in Mergers and Acquisitions
        15. Governance in Mergers and Acquisitions
        16. Mergers and Acquisitions Process
        17. Conclusion
      3. Chapter 6: Regulatory Environment and Financial Reporting Process of Financial Institutions
        1. Introduction
        2. Consolidation
        3. Regulatory Environment
        4. Bank Supervision
        5. Financial Modernization: The Gramm-Leach-Bliley Act
        6. Financial Reporting Process of Financial Institutions
        7. Statement of Financial Accounting Standards No. 115
        8. Auditing Proper Classifications of Marketable Securities
        9. Tax Consideration of Fair Value
        10. Recent Development of Fair Value Accounting
        11. Financial Reporting Requirements of Financial Institutions
        12. Corporate Governance of Financial Institutions
        13. Conclusion
    9. Part III: Fundamentals of Valuations: Concepts, Standards, and Techniques
      1. Chapter 7: Value and Valuation: A Conceptual Foundation
        1. Asset-Liability Management
        2. Investment Management
        3. Lending Management
        4. Liquidity Management
        5. Nature of Value
        6. Twelve Concepts of Value
        7. Types of Property that Can Be Valued
        8. Relationship among Different Types of Value
        9. Principles of Valuation Theory
        10. Pricing Value versus Reporting Value
        11. Limitations of the Valuation Process
        12. Conclusion
      2. Chapter 8: Approaches to Measuring Value
        1. Overview of the Valuation Process
        2. Cost Approach to Valuation
        3. Market Approach to Valuation
        4. Income Approach to Valuation
        5. Special Topics—Approches to Intangible Asset Valuation
        6. Special Topics—Business Valuation
        7. Valuation and Business Concentrations
        8. Special Topics—Closely Held Stock
        9. Special Topics—Valuing Widely Traded Companies
        10. Conclusion
      3. Chapter 9: Valuations for Tax and Accounting Purposes
        1. Tax Aspects of Mergers and Acquisitions
        2. Typical Tax-Oriented Valuations
        3. Accounting Aspects of Mergers and Acquisitions
        4. Typical Accounting-Oriented Valuations
        5. Acquisition Method
        6. Presentation, Disclosure, and Transition Requirements of Business Combinations
        7. Convergence in Accounting Standards on Mergers and Acquisitions
        8. Conclusion
      4. Chapter 10: Intangible Asset Valuation
        1. Nature and Types of Intangible Assets
        2. Amortizable versus Nonamortizable Intangible Assets
        3. Measuring the Useful Life of an Intangible Asset
        4. Establishing Value of Intangible Assets
        5. Amortization Methods
        6. Supporting Intangible Asset Valuation and Amortization
        7. Goodwill Impairment
        8. Conclusion
    10. Part IV: Assessment of Financial Institutions
      1. Chapter 11: Financial Analysis of Banks and Bank Holding Companies
        1. Types and Sources of Financial Data
        2. Overview of Financial Statements
        3. Composition of Bank Assets
        4. Composition of Bank Liabilities
        5. Off–Balance Sheet Items
        6. Composition of Bank Capital
        7. Regulatory Capital Components
        8. Risk-Based Capital
        9. Value-at-Risk Models
        10. Composition of Bank Income
        11. Composition of Bank Expenses
        12. Balance Sheet Analysis Illustration
        13. Income Statement and Profitability Analysis Illustration
        14. Loan Risk Analysis Illustration
        15. Liquidity and Investment Portfolio Analysis Illustration
        16. Portfolio Equities Analysis (REALM Model)
        17. Special Bank Holding Company Considerations
        18. Liability Management
        19. Conclusion
      2. Chapter 12: Internal Characteristics Assessment
        1. Objectives and Benefits of an Internal Characteristics Assessment
        2. Ten P Factor Framework
        3. Shareholder Value Creation
        4. Conclusion
      3. Chapter 13: External Environment Assessment
        1. Impact of External Environment on Value
        2. Political Analysis
        3. Economic Analysis
        4. Social Analysis
        5. Technological Analysis
        6. Other Analysis
        7. Conclusion
    11. Part V: Valuation of Mergers and Acquisitions
      1. Chapter 14: Bank Merger and Acquisition Process
        1. Strategy Phase
        2. Negotiation and Investigation Phase
        3. Finalization and Integration Phase
        4. Other Considerations
        5. Conclusion
      2. Chapter 15: Valuing a Bank as a Business Enterprise
        1. Business Enterprise versus a Collection of Assets
        2. Concept of the Banking Franchise
        3. Difference between Strategic and Tactical Valuations
        4. Why the Cost Approach Is Not Used for Strategic Bank Valuations
        5. Application of the Market Approach to Valuing a Bank
        6. Application of the Income Approach to Valuing a Bank
        7. Sensitivity of Value Estimate to Assumption Changes
        8. Value-Creation Opportunities and the Acquisition Price
        9. Valuation Methods for Mergers and Acquisitions
        10. Sophisticated Valuation Techniques for Mergers and Acquisitions
        11. Relation between Price and Value and Effect on Stockholders
        12. Conclusion
      3. Chapter 16: Valuation of Tangible Bank Assets
        1. Tangible Physical Assets
        2. Tangible Financial Assets
        3. Tangible Assets in Bank Mergers and Acquisitions
        4. Intangible Assets in Bank Mergers and Acquisitions
        5. Conclusion
      4. Chapter 17: Core Deposits as a Special Type of Intangible Asset Valuation
        1. Concept of Core Deposit Base as an Intangible Asset
        2. Internal Revenue Service Position on Core Deposits
        3. Important Core Deposit Tax Court Cases
        4. Deposits to Be Included in Valuation
        5. Alternative Approaches to Valuing a Core Deposit Base
        6. Core Deposit Base Life Estimation
        7. Application of the Cost Savings Approach
        8. Application of the Future Income Approach
        9. Systemically Important Financial Institutions
        10. Conclusion
      5. Chapter 18: Derivative Financial Instruments
        1. Authoritative Guidelines on Derivatives
        2. Derivative Markets
        3. Derivatives Risk Management
        4. Derivatives Risk Management Policy
        5. Accounting for Derivatives
        6. Tax Considerations of Derivatives
        7. Audit of Derivative Transactions
        8. Sources of Information on Derivatives
        9. Derivatives Valuation Models
        10. Derivatives under the Dodd-Frank Act of 2010
        11. Conclusion
      6. Chapter 19: Real-World Bank Valuation Complications
        1. Banks Experiencing Recent Losses
        2. Banks with Low Equity Capital
        3. Banks with Uncertain Future Loan Loss Exposure
        4. Preferred and Common Stock
        5. Highly Leveraged Banks
        6. Branch Acquisitions
        7. European Banking Model
        8. Initial Public Offering
        9. Islamic Banking System
        10. Emerging Issues in the Financial Services Industry
        11. Conclusion
    12. About the Author
    13. Index