Alumnus Schwartz Presents to Finance Seminar Class

Posted on 12/7/2018 10:55:33 AM

On Monday, December 3, Robert Schwartz came to IUP to present to Daniel Lawson’s Finance Seminar class (FIN422). Schwartz is a 2018 IUP graduate who majored in finance. Schwartz is currently working at PNC as an analyst in the Financial and Accounting Development Program.

While attending IUP, Rob served as the chief investment officer for IUP’s Student Managed Investment Portfolio and had published an academic paper with Lawson. Schwartz had also recently taken the CFA Level-1 exam and incorporated the CFA curriculum into the lecture materials.

Tim McMullen, a current finance major, summarized the lecture by stating, “Robert Schwartz, a recent IUP grad, stressed the importance of learning the inner workings of banks and similar financial institutions. He spoke about his experiences and how his college education has helped him succeed at PNC.”

Robert SchwartzTo begin the lecture, Schwartz laid a foundation for the banking industry by introducing students to the financial system. Citing the CFA curriculum, he decomposed the financial system into six main use cases: 1) to save; 2) to borrow; 3) to raise equity capital; 4) to manage risks; 5) to exchange assets for both immediate and future deliveries; and 6) to trade on information.

Continuing on, he dove deeper into each of these factors and explained the specifics behind each one and how they affect the overall financial system. From this point, he explained to us the different functions the financial system plays in the world. These functions are:

  1. Facilitating the use of the financial system by participants—this includes the responsibility to facilitate a means of exchange, provide accurate and symmetrically available information to market participants, and aid in ensuring commitments are fulfilled.

  2. Determining the equilibrium rate of interest—this being a systemically important tool to facilitating the flow of money through time via investment vehicles offered by banks.

  3. Allocating capital to the most effective uses—excess capital flowing from savers through institutions to borrowers should be allocated towards uses which are deemed most effective and should produce a rate of return compensatory to the risk the investor bears.

Upon covering the basics, Schwartz narrowed the focus to the company level spending considerable time touring through PNC’s financial statements. Attention was given to discussing the loan and deposit portfolios, risk management practices, and interrelationships between line items. Schwartz identified the key ways in which all banks—regional, large, and SIFI—work to maximize shareholder wealth by facilitating the uses of the financial system.

To encourage application of what was being discussed, the students were also tasked with critically determining a peer group for a bank they were assigned. The students were provided with a consolidated financial summary for all the banks, maps detailing loan origination volume by county, branch data, as well as rate information. From this, students were asked to give their rationale on why they chose the peer group. As a supplemental learning exercise, Schwartz left students with a series of commonly-utilized financial ratios for conducting relative analysis and outlined multiple thought-provoking questions to challenge students’ financial accounting perceptions.

One student in attendance, Skyler Carkuff, described the lecture stating that, “Rob provided informative ways to teach us how banks analyze their balance sheets and income statements to see how they compare to banks in their peer group”.

The Eberly College of Business and Information Technology appreciated the opportunity to learn from Rob Schwartz in this seminar class.