Response to the following problem:
National Bank has the following balance sheet (in millions) and has no off-balance-sheet activities.
|
Assets
|
|
Liabilities and Equity
|
|
Cash
|
$ 20
|
Deposits
|
$ 980
|
|
Treasury bills
|
40
|
Subordinated debentures
|
40
|
|
Residential mortgages
|
600
|
Common stock
|
40
|
|
Business loans (BB+ rated)
|
430
|
Retained earnings
|
30
|
|
Total assets
|
$1,090
|
Total liabilities and equity
|
$1,090
|
a. What is the leverage ratio?
b. What is the Tier I capital ratio?
c. What is the total risk-based capital ratio?
d. In what capital risk category would the bank be placed?