1. First Student Bank (FSB) has the following balance sheet: Assets Liabilities and Equity Cash $100 Transactions accounts $700 Treasury bill (30 days) $190 CDs $220 Treasury bond (5 years) $30 Subordinated debt $7 Repo $10 Preferred stock $5 Student tuition loans $500 Retained earnings $48 Student home mortgages $100 Common stock $5 Building and Furniture $110 Surplus $15 Loan loss reserves $(40) Total $1,000 Total $1,000 The bank is only two years old and is desperately trying to break into the local market for student loans. Consequently, it has followed the policy of guaranteeing tuition loans for three additional years to every student who promptly paid off his or her first-year loan. This policy has been a success, and the bank has signed agreements guaranteeing $800 in loans. The bank has also tried to encourage the building of 1-4 family home near campus. The bank is willing to lend money on these properties and to commit the repurchasing the homes when the students graduate. The repurchase price is settled at the time the mortgage is written, such that the whole package is expected to be profitable for the bank. Currently, the bank has obligated itself to spend $75 to repurchase home. 1. This is a student-owned-and-run bank and does not operate in international markets. Does it need to comply with the risk-based capital rules? 2. How many dollars of common equity capital does this bank have? How many dollars of Tier 1 capital does it have? 3. How many dollars of total capital does this bank have? 4. Categorize the banks assets by risk category. How many dollars of Category 1 assets, Category 2 assets and so on, does the bank have? 5. How many dollars of contingencies does this bank have? 6. How many dollars of risk-weighted assets does FSB own? 7. Does FSB have adequate Tier 1 capital? Adequate total capital?