4. The managers of Clear Creek Bank asks for a performance/risk analysis, and asks you to answer the following questions.

Clear Creek Banks balance sheet is as follows:

Assets: Ave. Duration

Securities 4% rate $ 100 million 1 year

Long-term Loans 8% rate $ 500 million 8 years

Total Assets $ 600 million

Liabilities & Equity

Short-term Deposits 1% rate $ 440 million 1 year

Certificates of Deposit 4% rate 100 million 3 years

Total Liabilities $540 million

Equity 60 million

Total Liab.& Equity $600 million

1. What is the banks expected net interest income $ (NII) and expected net interest margin (NIM)? [Hint: NII = Sum (Each asset x its rate) Sum (Each liability x its rate)]

and NIM = NII / Earning Total Assets (excludes cash)

NII ($s) ____________ NIM % ______________

2. If the bank has the NIM % that you calculated above, a PLL% of 1.00%, and a Burden % of 3.00%, what is the banks operating ROA before taxes (NIM Burden% - PLL%)? Operating ROA (OROA) _______________

c. What is the equity multiplier (EM) for the bank? (hint EM = total assets/equity)

EM ______________