Question
This problem focuses on bank capital management and various capital ratio measures. Following are recent balance sheet accounts for Prime First National Bank. Cash assets
This problem focuses on bank capital
management and various capital ratio measures. Following are
recent balance sheet accounts for Prime First National Bank.
Cash assets $ 17 million
Loans secured by real estate 40
Commercial loans 45
Government securities owned 16
Goodwill 5
Bank fixed assets 15
Total assets $138 million
Demand deposits $50 million
Time & savings deposits 66
Federal funds purchased 15
Trust-preferred securities 2
Owners' capital 5
Total liabilities and owners'capital $138 million
All amounts are in millions of dollars.
Note: The bank has loan-loss reserves of $10 million. The real estate
and commercial loans shown on the balance sheet are net of the
loan-loss reserves.
c. Calculate the Tier 1 Ratio based on the information provided
and the risk-adjusted assets estimate from Part b.
d. Calculate the Total Capital (Tier 1 plus Tier 2) Ratio based on
the information provided and the risk-adjusted assets estimate
from Part b.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-text-image.webp)
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-subtext-image.webp)
Step: 3
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-subtext-image.webp)
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started