Bank Analysis School Case Study

Capital Ratios Exercise Using the table below and the risk weight information on the following pages, calculate the four capital ratios at the bottom of the page. Is the bank well capitalized?

Assets

Balance

0%

20%

50%

100% 150% 250%

Currency on Hand 10 Cash due from Correspondent Bank Hint not 0% 5 U.S. Treasury Bonds (unconditionally guaranteed by U.S. Gov’t) 15 Municipals – General Obligations 20 Municipals – Revenue 10 Federal Reserve Bank Stock 5 1-4 Family 1 st Lien Owner Occupied 90 Commercial Real Estate Loans 80 Consumer Loans 15

Commercial Loans Past Due > 90 Days (not secured or guaranteed)

10

Mortgage Servicing Asset

10

ALLL

< 2 >

NA

Average Total Assets

268

Risk-Weighted Sub-Totals Total Risk-Weighted Assets

Ratios

Equity Capital:

Common Stock

1

Tier 1 Leverage Ratio

Surplus

11

CET1 Ratio

Retained Earnings

12

Tier 1 Capital Ratio

AOCI (opted out)

NA

Total Capital Ratio

Total

24

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