5. Smallville Bank has the following balance sheet, rates earned on its assets, and rates paid on itsliabilities.Balance Sheet (in thousands)Assets Rate Earned (%)Cash and due from banks $ 6,000 0Investment securities 22,000 8Repurchase agreements 12,000 6Loans less allowance for losses 80,000 10Fixed assets 10,000 0Other earning assets 4,000 9Total assets $134,000Liabilities and Equity Rate Paid (%)Demand deposits $ 9,000 0NOW accounts 69,000 5Retail CDs 18,000 7Subordinated debentures 14,000 8Total liabilities 110,000Common stock 10,000Paid-in capital surplus 3,000Retained earnings 11,000Total liabilities and equity $134,000If the bank earns $120,000 in noninterest income, incurs $80,000 in noninterest expenses, andpays $2,500,000 in taxes, what is its net income?

Financial Institution FIN 4303 - 03 Practice Problems (Chapter 13) Fall 2016 Questions 1, 3, 5, 7, 9 and 11 are assigned as the Makeup Assignment (for the class missed due to Hurricane Matthew). Due date is 11-16-2016 in class. 1. The financial statements for First National Bank (FNB) are shown below: Balance Sheet First National Bank Assets Liabilities and Equity Cash $ 450 Demand deposits Demand deposits from other FIs 1,350 Small time deposits Investments 4,050 Jumbo CDs Federal funds sold 2,025 Federal funds purchased Loans 15,525 Equity Reserve for loan losses (1,125) Premises 1,685 Total Total assets $23,960 liabilities/equity Income Statement First National Bank Interest income Interest expense Provision for loan losses Noninterest income Noninterest expense Taxes a. Calculate the dollar value of FNB's earning assets. b. Calculate FNB's ROA. c. Calculate FNB's asset utilization ratio. d. Calculate FNB's spread. $ 5,510 10,800 3,200 2,250 2,200 $23,960 $2,600 1,650 180 140 420 90 2. The financial statements for BSW National Bank (BSWNB) are shown below: Balance Sheet BSW National Bank Assets Liabilities and Equity Cash and due from banks $ 936 Demand deposits $ 5,040 Investments 3,100 Small time deposits 4,020 Federal funds sold 1,664 Jumbo CDs 4,680 Loans (less reserve for loan losses of 2,400) 9,120 Federal funds purchased 312 Premises 780 Equity 1,548 Total assets $15,600 Total liabilities/equity $15,600 Income Statement BSW National Bank Interest income $1,150 Interest expense 475 Provision for loan losses 150 Noninterest income 260 Noninterest expense 525 Taxes 60 a. What is the dollar value of earning assets held by BSWNB? b. What is the dollar value of interest-bearing liabilities held by BSWNB? c. What is BSWNB's total operating income? d. Calculate BSWNB's asset utilization ratio. e. Calculate BSWNB's net interest margin. Financial Institution FIN 4303 - 03 Practice Problems (Chapter 13) Fall 2016 3. The financial statements for MHM Bank (MHM) are shown below: Balance Sheet MHM Bank Assets Liabilities and Equity Cash and due from banks $ 1,920 Demand deposits $10,620 Demand deposits at other FIs 1,100 Small time deposits 10,350 Investments 6,080 Jumbo CDs 7,670 Federal funds sold 2,990 Federal funds purchased 470 Loans (less reserve for loan losses of 2,400) 20,040 Other liabilities 2,000 Equity 3,290 Premises 2,270 Total Total assets $34,400 liabilities/equity $34,400 Income Statement MHM Bank Interest income Interest expense Provision for loan losses Noninterest income Noninterest expense Taxes $4,048 2,024 100 700 975 235 a. Calculate the dollar value of MHM's earning assets. b. Calculate the dollar value of MHM's interest-bearing liabilities. c. Calculate MHM's spread. 4. The financial statements for THE Bank are shown below: Balance Sheet THE Bank Assets Liabilities and Equity Cash $ 200 Demand deposits $ 2,450 Demand deposits from other FIs 600 Small time deposits 4,800 Investments 1,800 Jumbo CDs 1,425 Federal funds sold 900 Federal funds purchased 1,000 Loans 6,900 Equity 975 Reserve for loan losses (500) Premises 750 Total Total assets $10,650 liabilities/equity $10,650 Income Statement THE Bank Interest income Interest expense Provision for loan losses Noninterest income Noninterest expense Taxes a. b. c. d. Calculate THE Bank's earning assets. Calculate THE Bank's ROA. Calculate THE Bank's total operating income. Calculate THE Bank's spread. $2,450 1,630 80 240 410 40 Financial Institution FIN 4303 - 03 Practice Problems (Chapter 13) Fall 2016 5. Smallville Bank has the following balance sheet, rates earned on its assets, and rates paid on its liabilities. Balance Sheet (in thousands) Assets Rate Earned (%) Cash and due from banks $ 6,000 0 Investment securities 22,000 8 Repurchase agreements 12,000 6 Loans less allowance for losses 80,000 10 Fixed assets 10,000 0 Other earning assets 4,000 9 Total assets $134,000 Liabilities and Equity Rate Paid (%) Demand deposits $ 9,000 0 NOW accounts 69,000 5 Retail CDs 18,000 7 Subordinated debentures 14,000 8 Total liabilities 110,000 Common stock 10,000 Paid-in capital surplus 3,000 Retained earnings 11,000 Total liabilities and equity $134,000 If the bank earns $120,000 in noninterest income, incurs $80,000 in noninterest expenses, and pays $2,500,000 in taxes, what is its net income? 6. Community Bank has the following balance sheet, rates earned on its assets, and rates paid on its liabilities. Balance Sheet (in thousands) Assets Cash and due from banks Investment securities Repurchase agreements Loans less allowance for losses Fixed assets Other assets Total assets Liabilities and Equity Demand deposits NOW accounts Retail CDs Subordinated debentures Total liabilities Common stock Paid-in capital surplus Retained earnings Total liabilities and equity $ 7,900 29,600 15,960 106,400 13,500 5,320 $178,680 $ 27,490 90,700 23,940 15,000 157,130 5,000 5,000 11,550 $178,680 Rate Earned (%) 0 1.50 1.15 7.25 0 0 Rate Paid (%) 0 0.50 1.20 5.50 If the bank earns $159,000 in noninterest income, incurs $306,000 in noninterest expenses, and pays $3,320,000 in taxes, what is its net income? Financial Institution FIN 4303 - 03 Practice Problems (Chapter 13) Fall 2016 7. Megalopolis Bank has the following balance sheet and income statement. Balance Sheet (in millions) Assets Liabilities and Equity Cash and due from banks $ 9,000 Demand deposits $ 19,000 Investment securities 23,000 NOW accounts 89,000 Repurchase agreements 42,000 Retail CDs 28,000 Loans 90,000 Debentures 19,000 Fixed assets 15,000 Total liabilities $155,000 Other assets 4,000 Common stock 12,000 Total assets $183,000 Paid-in capital 4,000 Retained earnings 12,000 Total liabilities and equity $183,000 Income Statement Interest on fees and loans $ 9,000 Interest on investment securities 4,000 Interest on repurchase agreements 6,000 Interest on deposits in banks 1,000 Total interest income $20,000 Interest on deposits $ 9,000 Interest on debentures 2,000 Total interest expense $11,000 Net interest income $ 9,000 Provision for loan losses 2,000 Noninterest income 2,000 Noninterest expenses 1,000 Income before taxes $ 8,000 Taxes 3,000 Net income $ 5,000 For Megalopolis, calculate: a. Return on equity b. Return on assets c. Asset utilization d. Equity multiplier e. Profit margin Financial Institution FIN 4303 - 03 Practice Problems (Chapter 13) Fall 2016 8. Dudley Bank has the following balance sheet and income statement. Balance Sheet (in millions) Assets Liabilities and Equity Cash and due from banks $ 7,500 Demand deposits $ 15,500 Repurchase agreements 13,000 NOW accounts 35,625 Other investment securities 34,050 Retail CDs 57,000 Loans 70,500 Debentures 14,250 Fixed assets 9,250 Total liabilities $122,375 Other assets 3,200 Common stock 5,000 Total assets $137,500 Paid-in capital 4,000 Retained earnings 6,125 Total liabilities and equity $137,500 Income Statement Interest on fees and loans $6,715 Interest on repurchase agreements 143 Interest on other investment securities 1,705 Interest on deposits in banks 60 Total interest income $8,623 Interest on deposits 3,018 Interest on debentures 1,140 Total interest expense $4,158 $4,465 Net interest income Provision for loan losses 200 Noninterest income 950 Noninterest expenses 1,720 Income before taxes $3,495 Taxes 1,220 Net income $2,275 For Dudley Bank, calculate: a. Return on equity b. Return on assets c. Asset utilization d. Equity multiplier e. Profit margin 9. Anytown Bank has the following ratios: a. Profit margin: 21% b. Asset utilization: 11% c. Equity multiplier: 12X Calculate Anytown's ROE and ROA. 10. Everytown Bank has the following ratios: a. Profit margin: 5% b. Asset utilization: 20% c. Equity multiplier: 7.75X Calculate Everytown's ROE and ROA. 11. You have been asked to analyze First Union Bank. You have only the following information on the bank at year-end 2015: Net income is $250,000, total debt is $2.5 million, and the bank's debt ratio is 55 percent. What is First Union Bank's ROE for 2015? Financial Institution FIN 4303 - 03 Practice Problems (Chapter 13) Fall 2016