CASH ST Mkt Sec LT Mkt Sec

Loans Other

$ $ $

$ $

ST Borrowing LT Borrowing

Deposits Other Funding

Subordinated Regulatory Capital

Debt Total Liabilities

Common Equity

($ mil)

• $ 100

• $ 150

• $ 400

• $ 100

• $ 100

• $ 850

• $ 150

% 2.00 7.00

1.00 10.00

2.00

$ 1,000

Total Assets

$ 1,000

Total Liabilities & Equity

Eastern Financial Management Consulting Client X Bank Portfolio - Project Balance Sheet as of 1 Sept 2021

Assets

($ mil) 250 200 100

400 50

Annual % (0.20) 1.50 5.00

7.50 10.00

1. You are asked by the Senior Management team of EFMC to:

35

25

35

2. Provide a brief a description of each Key Financial Ratio you opted to present to EFMC Senior Management, along with the rationale behind your ratio choices.

Please limit your rationale description to 50 words per Key Financial Ratio.

5

4. Why are all the above projections and analyses asked for in a before Tax consideration framework?

Please limit your answer to 150 words.

(A) prepare (before Tax consideration) - a Summary Pro-Forma Annual (12 month) Income Statement from the above provided 1 Sept 2021 Balance Sheet - and the following management provided annual General and Administrative Expense estimate of $5 million; and

(B) prepare a presentation for Senior EFMC management of the Key Financial ratios of Profitability, Asset Utilization Leverage, Liquidity and Debt to help Senior Management evaluate the Clients' operation.

3. Senior EFMC management now asks you to explore the options of repositioning the Clients' Balance Sheet by utilizing the CASH position:

*Note all Assets and Liabilities are currently traded at Client X's Book Value, all Assets and Liability interest rates remain unchanged with any realignment, and all projections and analyses are before tax consideration.*

(A) How much CASH would opt to redeploy and why?

(B) Where would you redeploy this CASH - Enrich Asset Mix? Reduce Liabilities? Buy back Equity? Combination of Assets Liabilities and Equity? Explain you choice(s)?

(C) Prepare a Pro-Forma Balance Sheet and Income Statement (before Tax- considerations) after redeploying Client X's CASH.

(D) Provide a Key Financial Ratio comparison between Client X operations before redeploying CASH and after redeploying CASH.