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TCE (tangible common equity)/RWA (risk-weighted assets) TCE/RWA Ratio is most commonly used to evaluate the capital strength of a bank. This parameter particularly helps investors and rating agencies to assess the value of a banking institution's core capital position minus intangibles and non-controlling interest. TCE equals shareholders equity (Total Equity Capital) minus intangible assets, preferred [...]

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Real-Estate Owned

If a bank or a credit union makes a loan and a borrower fails to meet the agreed mortgage payments on that loan, the property is put into a foreclosure auction. If the property does not meet the bank or credit unions base offer price at auction the property becomes the possession of the bank [...]

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Total Assets

Total assets of a bank is the sum total of all the long term and current assets owned by the bank.  The total assets of any bank are a measure of its capability to meet its liabilities in the normal course of business, and also when the bank ceases to be a going concern. Long [...]

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What is a Reverse Mortgage?

There are many different retirement tools available to those looking to develop alternative income sources. While tax-advantaged retirement accounts and pensions, as well as part-time jobs, are commonly used, many retirees don’t realize that they have another source of income locked up in the equity of their home. By making use of the reverse mortgage, [...]

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Regulatory Differences Between U.S. and Canadian Banks

Ever since the financial crisis of 2008, Canada’s banking system has been considered one of the most stable in the world – as well as being considered one of the most efficient and innovative systems in the world. In fact, the World Economic Forum recognizes the Canadian banking system as one of the soundest banking [...]

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Tier 1 Leverage Ratio

The Tier 1 leverage ratio is the ratio that is most strongly associated with the true amount of capital that is being leveraged and therefore is a good way to understand a banks current leverage. Tier 1 Leverage ratio defines the connection between a banks adjusted total assets (average total consolidated assets) and it's core [...]

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How Does a Bank Set Interest Rates for Loans?

When you go into a bank looking for a loan, the most important factor that influences how much you will pay over the lifetime of your loan is the interest rate that you are charged. The interest rates for loans that your bank lends at is basically a reflection of the default risk the bank [...]

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Texas Ratio (Modified)

The Modified Texas Ratio formula has been altered to take into account new rules that force banks to bring onto their balance sheet non-performing government-secured loans at face value, despite the value that they were acquired at or whether they are just being serviced by the bank. These non-performing government-secured loans are added into the [...]

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Other Intangible Assets

Other intangible assets (excluding goodwill) for banks and credit unions are those assets which are not physically present, yet provide astounding long term benefits to the institution. For intangible assets to be recognized on a bank's balance sheet, it is imperative that the intangible asset must have a legal benefit. The most common form of [...]

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Roth IRA vs. Traditional IRA

You have options when it comes to your retirement account. In addition to the 401(k) that might be offered at your workplace, you can also open an Individual Retirement Account (IRA). This helps you add a little more to your nest egg each year, boosting your retirement savings. However, it's important to note that you [...]

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