06_FINANCE COMPANIES.pdf

Financial Statement Analysis for Finance Companies Finance Companies ► Types of Non-bank Banks (NBB). ►Sort of banks, but not really Bank Take Deposits Grant Loans Finance Company Only Grant Loans NBB Do only one. Types of Finance Companies According to who the customers are: A. Consumer Finance Com...

Financial Statement Analysis for Finance Companies Finance Companies ► Types of Non-bank Banks (NBB). ►Sort of banks, but not really Bank Take Deposits Grant Loans Finance Company Only Grant Loans NBB Do only one. Types of Finance Companies According to who the customers are: A. Consumer Finance Companies 1. Auto-Loans: Finance a car or vehicle purchase. 2. Home Mortgages: The collateral is a real estate property 3. Consumer Durables: Appliances and Furniture P15M P10M Types of Finance Companies According to who the customers are: B. Business Finance Companies 1. 2. 3. Floor-plan Inventory: Finance an inventory for a business with the “floor” of inventory as the collateral. Leasing: (e.g. trucking) Accounts Receivable Financing: (e.g. Pledging, Factoring). Types of Finance Companies ►According to who the owners are: A. Captive Sales Finance Companies: Owned by the autodealer companies (usually cars). B. Sales Finance Company: to cater not only one autodealers. C. Bank Subsidiary D. Independent Finance Company Financing Finance Companies Assets Liabilities Equity Small Short-term Long-term Commercial Papers Bonds Payable Loans Payable Regulation of Financing Companies ► SEC ► BSP ► Minimum Capital Adequacy Ratio (CAR) Basel II - 8% Basel III – 10.5% Products of Financial Services Industry in the US -1950 vs 2007 Examples of FI with quasi-banking functions