NB bank earns 1% on its assets and has a 20% tax rate. It earns 8% on
Question:
NB bank earns 1% on its assets and has a 20% tax rate. It earns 8% on loans, and 6% on investments. It pays 4% on-time deposits, and 3% on federal funds purchased. Demand deposits pay no interest.
Balance Sheet for NB (in $M)
Assets Liabilities & Equity
Cash and due from banks $20 Demand deposits $40
Investments 200 Time deposits 150
Loans 120 Federal funds purchased 120
Premises 20 Equity 50
360 $360
- Construct an Income Statement for NB bank (assume a 20% tax rate and zero loan loss provision).
- With this information construct as many ratios of bank performance as you can with the data available.
Quantitative Investment Analysis
ISBN: 978-1119104223
3rd edition
Authors: Richard A. DeFusco, Dennis W. McLeavey, Jerald E. Pinto, David E. Runkle