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.
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.”
To 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
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:
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.
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.
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 Technologhy appreciated the
opportunity to learn from Rob Schwartz in this seminar class.