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Calculate the new value ofCET1, Tier I, and total capital ratios for the following transactions Onshore Bank has $31 million in assets, with risk-adjusted assets
Calculate the new value ofCET1, Tier I, and total capital ratios for the following transactions
Onshore Bank has $31 million in assets, with risk-adjusted assets of $21 million. Core Equity Tier 1 (CET1) capital is $1,050,000, additional Tier I capital is $270,000, and Tier II capital is $422,000. The current value of the CET1 ratio is 5 percent, the Tier I ratio is 6.29 percent, and the total capital ratio is 8.3 percent. Calculate the new value of CET1, Tier I, and total capital ratios for the following transactions. a. The bank repurchases $111,000 of common stock with cash. (Round your answers to 2 decimal places. (e.g., 32.16)) CET1 ratio Tier I ratio Total capital ratio % % % b. The bank issues $3.1 million of CDs and uses the proceeds to issue category 1 mortgage loans with a loan-tovalue ratio of 70 percent. (Round your answers to 2 decimal places. (e.g., 32.16)) CET1 ratio Tier I ratio Total capital ratio % % % c. The bank receives $511,000 in deposits and invests them in T-bills. (Round your answers to 2 decimal places. (e.g., 32.16)) CET1 ratio Tier I ratio Total capital ratio % % % d. The bank issues $811,000 in common stock and lends it to help finance a new shopping mall. The developer has an A+ credit rating. (Round your answers to 2 decimal places. (e.g., 32.16)) CET1 ratio Tier I ratio Total capital ratio % % % e. The bank issues $2.1 million in nonqualifying perpetual preferred stock and purchases general obligation municipal bonds. (Round your answers to 2 decimal places. (e.g., 32.16)) CET1 ratio Tier I ratio Total capital ratio % % % f. Homeowners pay back $5.1 million of mortgages with loan-to-value ratios of 50 percent and the bank uses the proceeds to build new ATMs. (Round your answers to 2 decimal places. (e.g., 32.16)) CET1 ratio Tier I ratio Total capital ratio % % % Onshore Bank has $31 million in assets, with risk-adjusted assets of $21 million. Core Equity Tier 1 (CET1) capital is $1,050,000, additional Tier I capital is $270,000, and Tier II capital is $422,000. The current value of the CET1 ratio is 5 percent, the Tier I ratio is 6.29 percent, and the total capital ratio is 8.3 percent. Calculate the new value of CET1, Tier I, and total capital ratios for the following transactions. a. The bank repurchases $111,000 of common stock with cash. (Round your answers to 2 decimal places. (e.g., 32.16)) % CET1 ratio 4.47 Tier I ratio 5.76 Total capital ratio 7.77 % % b. The bank issues $3.1 million of CDs and uses the proceeds to issue category 1 mortgage loans with a loan-tovalue ratio of 70 percent. (Round your answers to 2 decimal places. (e.g., 32.16)) % CET1 ratio 4.53 Tier I ratio 5.70 Total capital ratio 7.52 % % c. The bank receives $511,000 in deposits and invests them in T-bills. (Round your answers to 2 decimal places. (e.g., 32.16)) % CET1 ratio 5.00 Tier I ratio 6.29 Total capital ratio 8.30 % % d. The bank issues $811,000 in common stock and lends it to help finance a new shopping mall. The developer has an A+ credit rating. (Round your answers to 2 decimal places. (e.g., 32.16)) % CET1 ratio 8.69 Tier I ratio 9.96 Total capital ratio 11.93 % % e. The bank issues $2.1 million in nonqualifying perpetual preferred stock and purchases general obligation municipal bonds. (Round your answers to 2 decimal places. (e.g., 32.16)) % CET1 ratio 4.90 Tier I ratio 6.16 Total capital ratio 17.94 % % f. Homeowners pay back $5.1 million of mortgages with loan-to-value ratios of 50 percent and the bank uses the proceeds to build new ATMs. (Round your answers to 2 decimal places. (e.g., 32.16)) % CET1 ratio 4.46 Tier I ratio 5.61 Total capital ratio 7.40 % % Onshore Bank has $31 million in assets, with risk-adjusted assets of $21 million. Core Equity Tier 1 (CET1) capital is $1,050,000, additional Tier I capital is $270,000, and Tier II capital is $422,000. The current value of the CET1 ratio is 5 percent, the Tier I ratio is 6.29 percent, and the total capital ratio is 8.3 percent. Calculate the new value of CET1, Tier I, and total capital ratios for the following transactions. a. The bank repurchases $111,000 of common stock with cash. (Round your answers to 2 decimal places. (e.g., 32.16)) % CET1 ratio 4.47 Tier I ratio 5.76 Total capital ratio 7.77 % % b. The bank issues $3.1 million of CDs and uses the proceeds to issue category 1 mortgage loans with a loan-tovalue ratio of 70 percent. (Round your answers to 2 decimal places. (e.g., 32.16)) % CET1 ratio 4.53 Tier I ratio 5.70 Total capital ratio 7.52 % % c. The bank receives $511,000 in deposits and invests them in T-bills. (Round your answers to 2 decimal places. (e.g., 32.16)) % CET1 ratio 5.00 Tier I ratio 6.29 Total capital ratio 8.30 % % d. The bank issues $811,000 in common stock and lends it to help finance a new shopping mall. The developer has an A+ credit rating. (Round your answers to 2 decimal places. (e.g., 32.16)) % CET1 ratio 8.69 Tier I ratio 9.96 Total capital ratio 11.93 % % e. The bank issues $2.1 million in nonqualifying perpetual preferred stock and purchases general obligation municipal bonds. (Round your answers to 2 decimal places. (e.g., 32.16)) % CET1 ratio 4.90 Tier I ratio 6.16 Total capital ratio 17.94 % % f. Homeowners pay back $5.1 million of mortgages with loan-to-value ratios of 50 percent and the bank uses the proceeds to build new ATMs. (Round your answers to 2 decimal places. (e.g., 32.16)) % CET1 ratio 4.46 Tier I ratio 5.61 Total capital ratio 7.40 % %Step by Step Solution
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