Basic Concepts

Bank Reports
Big Picture B. Ulo B
Bank Reports
A call report contains information about the bank's financial health.
Needs
A need is something that is required for an organism to live a
healthy life.
FINANCIAL STATEMENT
are written records that convey the businessactivities
and the financial performance of a company.
 Provisions of Chapter IV of the New
General Banking Act

- Sec.58 Independent auditor.

- Sec.59. AUTHORITY TO REGULATE ELECTRONIC

TRANSACTIONS.

- Sec.60.FINANCIAL STATEMENT.
 Provisions of Chapter IV of the New
General Banking Act

-Sec.61.Publication of financial statement.

-SEC.62.PUBLICATION OF CAPITAL STOCK

 Types of Bank Reports:
CONDENSED WITH BANK STATEMENT

This is usually issued for publication or sent to depositors and

stockholders as a means of serving then an opportunity to look into their
particular banks financial position.

REAL BANK STATEMENT.

This statement is usually in more detailed form an is prepared for the
regulatory and supervisory agencies. it is also the basis for the
preparation of other reports.
ANNUAL REPORTS.
provide information on the company's mission and history and
summarize the company's achievements in the past year.

THE BANK STATEMENT

is a summary of financial transactions that occurred at a certain institution

-Cash on-hand

-Other cash resources

A. EXCHANGES FOR THE CLEARINGHOUSE.
This consist of checks deposited at or cashed by the bank preparing the statement
during the course of the day. and which are drawn on banks within the city that re
members of the clearing house .hence, such items are subject to clearing at the
designated clearing period.

B. COLLECTIONS AND TRANSET

The bank credits the account of the depositor/consumers pending receipt of the
proceeds. In this case, the deposit and withdrawal accounts are owned deferred,
subject to final payment or receipt of any outstanding balances.
 C. OTHER CASH ITEMS.
This account may include other miscellaneous items such as bond coupons for
which the depositors have been credited and collections of the coupon.

DUE FROM BANKS this represents deposit carried with other banks.

BALANCES WITH FOREIGN BANKS

this consists of deposits for funds held abroad mainly to fill foreign
exchange needs.

LOANS AND DISCOUNTS

this account is a major item of the banks assets side.
GOVERNMENTS SECURITIES
This is other major items which will serve to buffer any provable loans of the
depositors.

OTHER SECURITIES
this will represents the stocks and bonds or short terms investment not fully
guaranteed by the Philippines government.

BANK BUILDING, FURNITURE AND FIXTURE

this items represent the monetary valued the properties owned by the banks
to carry on its functions.
OTHER REAL STATE OWNED
this account arises out of the fact that banks foreclose real estate mortgages
and the monitory value if the assets in their books until the real state are
disposed of.

COSTUMER LIABILITY UNDER LETTER OF CREDIT

The use of letters of credit in financing foreign and domestic trade has
become quite popular this days.

COSTUMERS LIABILITY UNDER ACCEPTANCES

When a bank accepts a drop it in effect promises to pay the drop upon
presentation.
INCOME ACCRUAL BUT NOT YET COLLECTED
When a banks grants loans with interest collected majority, the bank in effect has
future earnings which as yet have not been collected.

OTHER ASSETS
this item serves to ―round up" any or all other assets not otherwise
described in details.

BANK LIABILITIES

On the liability side of the banks statements are found three main
classifications namely: the liabilities, the reserve accounts and the
stockholders equity.
 LIABILITIES DEMAND DEPOSITS
This account represent claims of depositors who withdraw their deposits by
means of checks.
TIME DEPOSIT
This represents

the claims of depositors who knew their money in the bank for a
specified period of time and for which the bank must likewise be ready to pay at
maturity.
GOVERNMENT DEPOSITS
This represents
deposits, either time or demand, which belongs to the
government or its instrumentalists and political subdivisions
CASHIER'S CHECK OUTSTANDING
The banks cashier, in
his official capacity as such, issues to either pay the banks
obligations, to accommodate customers or to remit funds.
CERTIFIED CHECKS OUTSTANDING

When a depositor requests the bank to certify his check, the bank immediately
sets aside the amount of check by debiting the depositor's account before
stamping certification on the face of the check.
DUE TO BANKS
This account

represents deposits or balances of other banks with the bank
preparing the statement.
LETTERS OF CREDIT OUTSTANDING

This account arises out of the issuance of letters of credit for which the bank
obligates itself to pay or guarantee payment.
ACCEPTANCE OUTSTANDING
This is similar to the account letters of credit outstanding except that it makes
the banks obligation more real than contingent.
BILLS PAYABLE.
This represents the claims of creditor of the bank for funds borrowed by it.

RE-DISCOUNTED NOTES.
This account arises out of the use of endorsed commercial papers for the
purpose of procuring funds. The commercial papers server as the security and
the banks endorsement thereon establishes its obligation in case the primary
debtors fail to pay. Commercial banks discount their notes with BangkoSentral
when they run out of loan-able funds or for some other need.
DISCOUNTS COLLECTED BUT NOT YET EARNED
When the bank gives out a loan and collects interest in advance, the amount
deducted is not as yet really earned in full.

OTHER LIABILITIES
This account serves as the counterpart of the "other assets" and includes all other
liabilities not otherwise designated in detail. Officers unpaid checks may be one of
such accounts.
Reserves. The accounting reserves in a bank statement are:

*Reserve for accrued taxes.

*Reserve for accrued interest.
*Reserve for accrued expenses.
*Reserve for depreciation on banks properties.
*Reserve for depreciation on securities.
* Reserve on contigencies.

STOCK HOLDER EQUITY

The account representing the stock holders equity are sometimes termed as the
banks capital accounts. This group of accounts becomes doubly significant for
the fact that it is usually a " thin equity" compared to the deposit liability.
Capital stock-
this account is carried as per the par or face value of the total number of stocks
appearing in the banks charter.

Surplus
this account may consist of earning derived from operation apart of the surplus
maybe derive from the sales of obsolete assets.
MINIMUM CAPITAL REQUIREMENTS

the monetary board may require that such ratio be determined on the
basis of the net worth and risk assets of a bank and subsidiaries, financial
or otherwise, as well as prescribe the composition and the manner of
determining the net worth and total risk assets of banks and their
subsidiaries. Provided, that in the exercise of this, authority, the monetary
board shall, to the extent Feasible, conform to internationally accepted
standards, including those of the bank for international Settlements (BIS),
relating to risk -based capital requirements.

BANKING EARNINGS AND EXPENSES

Banking earnings and expenses of great importance to a bank, and for that
matter to all other businesses, is the profits and loss statement. Although
these is seldom published, it is nevertheless important in the appraisal of
banks financial conditions. A bank must earn enough to meet its expenses, to
cover losses, as well as to provide a return on the stock holders investments. A
banks profits and loss statements (or income statements) is singular in sense
that it deals mainly on financial transactions in the account are confined to the
sources of income and the disposition of the same.
CRITICISM ON PUBLISHED STATEMENTS

1. Published statement are too abbreviated as to give any significant detail in

banking operations.
2. The ordinary layman is not conversant with banking functions, or perhaps even with the
banks, so that he cannot understand the significance of the accounts appearing in the
statement.
3. The assets and liabilities are so combined as to make it impossible to ―look through‖ or
discover the real picture of the bank unless one is an expert in financial statement
analysis.
4. The real picture of the bank's financial position as reflected in the financial reports will
depend largely on how the accountant estimates the valuation of assets and how
completely he enumerates the liabilities. Some accountants, for instance, resort to secret
reserves.
ANALYSIS OF TRANSACTIONS

As a palliative to the criticisms levelled on bank statements, a few

transactions which give rise to the contents of the bank statement and
changes therein are cited. Offhand, it must be admitted that such
presentations would not make the student all-knowing regarding banking
functions and transactions. This may, therefore, only serve as eye-openers
and it is up to the reader to seek ―wider horizons‖ to broaden his
knowledge of banking theory and practice. Assuming that the bank's charter
represents the issue of 50,000 shares at a value of P100.00 each and that the
stockholders have fully paid their shares, the resulting figure will be:
Total Liablities
CLASSIFICATION OF BANK ACCOUNTS

It must have been noted in the shift on the balance sheet affected by the
transactions that there is also a change in the bank accounts. Assets are
generally of a current or fixed nature. However, some are more liquid than
others and, therefore, in analysing bank statements, it might be noticed
that their sequence reflects the classification. The same is true with the
liabilities. Generally, the liabilities represent claims of stockholders,
depositors, outside creditors (which may be other banks or the general
public).