Consider the balance sheet data below for Wakulima Bank Ltd .The associated yields for earnings assets and cost of liabilities appear on the balance sheet

ASSETS

$MILLIONS

RATE %

LIABILITY & EQUITY

$MILLIONS

RATE %

Cash

300

0

Time deposit

1600

Securities

1600

6.5

MMDAs

3600

6

Commission loan

4000

9.0

Certificate of Deposit

2600

11

Credit card loan

3800

10.0

ST. Deposits

1360

9

Loss reserves

200

Def.Tax credits

200

Other assets

500

Equity

640

Total Assets

10000

Liab+Equity

10000

Calculate:

i) Risk weighed assets

ii) Tier 1 capital

iii) Tier 1 ratio

iv) Total Capital

v) Total Capital Ratio

vi) Interest Income

vii) Non- interest income

viii) Interest expense

ix) Net interest income

x) Provision for loan losses

xi) Non- interest expense

xii) Pre-tax income

xiii) Net income ( assume the tax rate is 40%)

xiv) ROE

xv) ROA

xvi) NOPAT

xvii) EVA

Assume the net charge offs =$200 , cash taxes paid =$39 and allocated risk capital =$550 with a capital charge of 12%

xviii) Is the bank meeting its capital requirements

b) Suppose the bank wants to reach the well capitalized standard of total capital to risk weighted assets of 10%.Assume that the bank sells $1 billion of credit card loans and use the proceeds to pay-off maturing certificate of deposits of $940 million and buy-back $30 million of stock

i) Calculate and show the change on the banks balance sheet

ii) Calculate and show the change on the banks income statement

iii) Calculate ROA, ROE and EVA

iv) Calculate Tier 1 capital, Tier 1 ratio

v) Calculate Tier 2 capital, and Total capital ratio