Onshore Bank has $37 million in assets, with risk-adjusted assets of $27 million. Core Equity Tier 1
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Question:
Onshore Bank has $37 million in assets, with risk-adjusted assets of $27 million. Core Equity Tier 1 (CET1) capital is $1,250,000, additional Tier I capital is $480,000, and Tier II capital is $434,000. The current value of the CET1 ratio is 4.63 percent, the Tier I ratio is 6.41 percent, and the total capital ratio is 8.01 percent.
Calculate the new value of CET1, Tier I, and total capital ratios for the following transactions.
- The bank issues $2.7 million in nonqualifying perpetual preferred stock and purchases general obligation municipal bonds.
- Homeowners pay back $5.7 million of mortgages with loan-to-value ratios of 50 percent and the bank uses the proceeds to build new ATMs.
Related Book For
Financial Markets and Institutions
ISBN: 978-0077861667
6th edition
Authors: Anthony Saunders, Marcia Cornett
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