First Safe Interstate Bank is a small, regional bank that is trading at a price to book $($equity$)$ ratio of $1\mathrm{.}50.$ The bank is in stable growth, with earnings and dividends expected to grow $3\%$ a year in perpetuity. The stock has a beta of $1,$ the risk$-$free rate is $5\%$ and the equity risk premium is $4\%.$

a$.$ Assuming that the market has priced this stock correctly, estimate the expected return on equity for the bank.

b$.$ Now assume that as a result of the banking crisis of the last few weeks, you expect the regulatory authorities to raise capital requirements immediately for banks by $20\%.($Banks will need $20\%$ more book equity to deliver the same net income$).$ Also, assume that the equity risk premium has risen to $6\%.$ If the stable growth rate remains $3\%,$ estimate the new price to book equity ratio for First Safe Interstate Bank.