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Onshore Bank has $23 million in assets, with risk-adjusted assets of $13 million. Core Equity Tier 1 (CET1) capital is $640,000, additional Tier I capital
Onshore Bank has $23 million in assets, with risk-adjusted assets of $13 million. Core Equity Tier 1 (CET1) capital is $640,000, additional Tier I capital is $150,000, and Tier II capital is $406,000. The current value of the CET1 ratio is 4.92 percent, the Tier I ratio is 6.08 percent, and the total capital ratio is 9.2 percent. Calculate the new value of CET1, Tier I, and total capital ratios for the following transactions.
- The bank repurchases $103,000 of common stock with cash.
- The bank issues $2.3 million of CDs and uses the proceeds to issue category 1 mortgage loans with a loan-to-value ratio of 70 percent.
- The bank receives $503,000 in deposits and invests them in T-bills.
- The bank issues $803,000 in common stock and lends it to help finance a new shopping mall. The developer has an A+ credit rating.
- The bank issues $1.3 million in nonqualifying perpetual preferred stock and purchases general obligation municipal bonds.
- Homeowners pay back $4.3 million of mortgages with loan-to-value ratios of 50 percent and the bank uses the proceeds to build new ATMs.
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