From the balance sheet below, calculate the following. Compute the amount of ris

Question

From the balance sheet below, calculate the following.

Compute the amount of risk adjusted assets

Compute the amount of Tier 1 Common Equity

Compute the amount of Tier Total Capital

Compute common equity tier 1 percent

Compute tier 1 capital percent

Compute the total capital ratio

2. For each of the amounts of bank capital listed below, determine the degree of capital adequacy of the bank. Show your work.

a.       Tier 1 capital = $23 million; tier 2 capital = $7 million; TRAA = $275 million

b.       Tier 1 capital = $12 million; tier 2 capital = $15 million; TRAA = $330 million

c.        Tier 1 capital = $128 million; tier 2 capital = $52 million; TRAA = $2,167 million

Cash 1 Checking accounts 84 Deposits @ Federal Reserve 4 Savings accounts 834 Government Bonds 120 Borrowings 274 Government Agency Bonds 50 Subordinated Debt 38 Municipal Bonds 134 Other Liabilities 108 Commercial Paper 30 Total Liabilities 1,338 Residential Mortgages 225 Business Loans 438 Common Stock 54 Consumer Loans 340 Retained Earnings 102 Loan Loss Reserves -5 Fixed Assets 157       Total Assets 1,494 Total Liabilities and Equity 1,494

Explanation / Answer

Ans

Risk Weighted Assets Assers Amount Risk Weight Weighted Balance Cash 1 0%                -   Deposits @ Federal Reserve 4 0%                -   Government Bonds 120 0%                -   Government Agency Bonds 50 0%                -   Municipal Bonds 134 20%         26.80 Commercial Paper 30 100%         30.00 Residential Mortgages 225 50%      112.50 Business Loans 438 100%      438.00 Consumer Loans 340 100%      340.00 Fixed Assets 157 100%      157.00 Total Risk Weighted Assets 1,104.30

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