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. B. SHORT PROBLEM As a manager of Community Bank of College Place (CBCP), you anticipate the following over the next year: Gross interest expense
. B. SHORT PROBLEM As a manager of Community Bank of College Place (CBCP), you anticipate the following over the next year: Gross interest expense = 5 percent of total assets Provision for loan losses = 1 percent of total assets Income tax rate of 35% of net income before tax Non-interest expense = 2 percent of total assets Non-interest income = 1 percent of total assets. Gross interest income over the year=8% of total assets Capital ratio (total capital/total assets) = 10% Answer the following questions. Show your work 1. Calculate net interest income (or margin) percentage, 2. Determine net return on assets (ROA) percentage. 3. As manager of CBCP, you are thinking about shifting funds out of short-term investments in Treasury securities and into auto, home, and other consumer loans. What affect would this strategy likely have on: (a) net interest income percentage (increase or decrease) (b) provision for loan losses (increase or decrease) (c) non-interest expense (increase or decrease) (d) liquidity risk (increase or decrease) (e) overall default or credit risk of its assets (increase or decrease) (1) overall interest-rute risk (increase or decrease) . B. SHORT PROBLEM As a manager of Community Bank of College Place (CBCP), you anticipate the following over the next year: Gross interest expense = 5 percent of total assets Provision for loan losses = 1 percent of total assets Income tax rate of 35% of net income before tax Non-interest expense = 2 percent of total assets Non-interest income = 1 percent of total assets. Gross interest income over the year=8% of total assets Capital ratio (total capital/total assets) = 10% Answer the following questions. Show your work 1. Calculate net interest income (or margin) percentage, 2. Determine net return on assets (ROA) percentage. 3. As manager of CBCP, you are thinking about shifting funds out of short-term investments in Treasury securities and into auto, home, and other consumer loans. What affect would this strategy likely have on: (a) net interest income percentage (increase or decrease) (b) provision for loan losses (increase or decrease) (c) non-interest expense (increase or decrease) (d) liquidity risk (increase or decrease) (e) overall default or credit risk of its assets (increase or decrease) (1) overall interest-rute risk (increase or decrease)
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