Question
National Bank has the following balance sheet (in millions) and has no off-balance-sheet activities. Assets Cash 20 Treasury bills 40 Residential mortgages (category 1; loan-to-value
National Bank has the following balance sheet (in millions) and has no off-balance-sheet activities.
Assets
Cash 20
Treasury bills 40
Residential mortgages (category 1; loan-to-value ratio = 70%) 600
Business loans 430
Total assets $1,090
Liabilities and Equity
Deposits 980
Subordinated debentures 25
Common stock 45
Retained earnings 40
Total liabilities and equity $1,090
a) what is the CET 1 risk-based ratio?
b) What is the Tier 1 risk-based capital ratio?
c) What is the total rish-based capital ratio?
d) What is the leverage ratio?
e) In what capital risk category would National Bank be placed?
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