financial statement of a commerical bank and summary

## Objective of the Assignment

The goal of this group assignment is to help students **connect financial institution balance sheets to real-world risks** discussed in class, particularly **interest rate risk and credit risk**, before **Midterm Exam #1**.

This assignment is designed to:

Strengthen understanding of how risks originate from financial statements

Improve applied financial analysis skills

Encourage teamwork and critical thinking

Prepare students for exam-style conceptual questions

## Use of AI (Allowed with Conditions)

You **may use AI tools** (such as ChatGPT) **only as a support tool** for:

Structuring ideas

Clarifying concepts

Improving writing quality

**Important:**

You are **required** to:

Personally review financial statements, balance sheets, and institutional information

Ensure all analysis reflects your own understanding

Include an **AI Acknowledgment section** explaining:

What AI tool was used

For what purpose (e.g., outlining, editing, clarification)

Failure to provide proper acknowledgment may result in penalties.

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## Required Components

### 1. Identification of Major Risks

Identify **at least four (4)** major risks faced by your chosen institution.

Examples include (but are not limited to):

Interest Rate Risk

Credit Risk

Liquidity Risk

Market Risk

Operational Risk

Insurance / Underwriting Risk

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### 2. Balance Sheet Explanation (Core Requirement)

For **each identified risk**, clearly explain:

Which **assets and liabilities** contribute to the risk

How the **maturity mismatch**, cash flow structure, or valuation exposure creates the risk

Why this risk is particularly important for your institution type

Your explanation **must explicitly reference balance sheet items** (e.g., loans, deposits, securities, reserves, policy liabilities).

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### 3. Real-World Example

For **each risk**, provide **one real-world example**, either:

Recent (preferred), or

Historical

Examples may include:

Bank failures

Financial crises

Regulatory actions

Large losses or stress events

Explain **what went wrong** and **which risk materialized**.

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## Suggested Structure (Highly Recommended)

1. Introduction to the Financial Institution

2. Overview of the Balance Sheet Structure

3. Risk #1: Description, Balance Sheet Link, Example

4. Risk #2: Description, Balance Sheet Link, Example

5. Risk #3: Description, Balance Sheet Link, Example

6. Risk #4: Description, Balance Sheet Link, Example

7. Key Takeaways

8. AI Acknowledgment

9. References (if used)

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## Formatting Requirements

File format: **PDF**

Length: **510 pages**

Font: Professional and readable

Use headings and subheadings

Diagrams or tables are encouraged (but optional)

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IMPORTANT INFO

the finacial institution we have chose is a bank called International Bank of Commerce (IBC) they are located in laredo texas and i want you to give me a a risk of the bank and a real world example based off the balance sheet or just follow the directions said there. You are to use the edgar sec (https://www.sec.gov/search-filings) to get the balance sheet. you are only to use this bank and no other one. do not use interest rate risk. here are some examples you can use.

Identify at least four (4) major risks faced by your chosen institution.

Examples include (but are not limited to):

Credit Risk

Liquidity Risk

Market Risk

Operational Risk

Insurance / Underwriting Risk