USF Bank Balance Sheet 2010 1. From the balance sheet below, calculate the following.
Cash 1 Checking accounts 84
Deposits @ Federal Reserve 4 Savings accounts 834
Government Bonds 120 Borrowings 274
Government Agency Bonds 50 Subordinated Debt 38
Municipal Bonds 134 Other Liabilities 108
Commercial Paper 30 Total Liabilities 1,338
Residential Mortgages 225
Business Loans 438 Common Stock 54
Consumer Loans 340 Retained Earnings 102
Loan Loss Reserves -5
Fixed Assets 157
Total Assets 1,494 Total Liabilities and Equity 1,494
a. Compute the amount of risk adjusted assets (TRAA)
b. Compute the amount of Tier 1 Common Equity
c. Compute the amount of Tier Total Capital
d. Compute common equity tier 1 percent
e. Compute tier 1 capital percent
f. Compute the total capital ratio
The capital adequacy rating is the only CAMELS measure that is quantitative, based on an international agreement called the Basel Accord
(1) The bankAc€?cs assets are split into four categories on the basis of general riskiness:
A1 = reserves + government securities;
A2 = interbank deposits + fully backed mortgage bonds + government agency securities;
A3 = municipal bonds + residential mortgages;
A4 = other securities (such as commercial paper) + loans + fixed assets (such as buildings)
(2) The bankAc€?cs total risk-adjusted assets (TRAA) are calculated as: TRAA = (0.0 Af- A1) + (0.2 Af- A2) + (0.5 Af- A3) + (1.0 Af- A4).
(3) The bankAc€?cs capital is divided into several categories: tier 1 capital = stockholder equity capital; tier 2 capital = loan loss reserves + subordinated debt; total capital = tier 1 capital + tier 2 capital
(4) A bank is adequately capitalized if its tier 1 capital exceeds 0.04 Af- TRAA and total capital exceeds 0.08 Af- TRAA; it is well capitalized if tier 1 capital exceeds 0.06 Af- TRAA and total capital exceeds 0.10 Af- TRAA.