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1, Dudley Bank has the following balance sheet and income statement. Calculate  Provision for loan loss ratio Noninterest expense ratio Tax ratio

1, Dudley Bank has the following balance sheet and income statement. Calculate  Provision for loan loss ratio Noninterest expense ratio Tax ratio

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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11, Dudley Bank has the following balance sheet and income statement.

Calculate 

    1. Provision for loan loss ratio
    2. Noninterest expense ratio
    3. Tax ratio
    4. Overhead efficiency
### Educational Website Content: Financial Statements Overview #### Balance Sheet (in millions) The balance sheet provides a snapshot of the bank's financial position, showing its assets, liabilities, and equity as follows: **Assets** - Cash and due from banks: $7,500 - Repurchase agreements: $13,000 - Other investment securities: $34,500 - Loans: $70,500 - Fixed assets: $9,250 - Other assets: $3,200 **Total Assets:** $137,950 **Liabilities and Equity** - Demand deposits: $15,500 - NOW accounts: $35,625 - Retail CDs: $57,000 - Debentures: $14,250 **Total Liabilities:** $122,375 **Equity** - Common stock: $5,000 - Paid-in capital: $4,000 - Retained earnings: $6,125 **Total Liabilities and Equity:** $137,500 #### Income Statement The income statement shows the bank's revenue and expenses to determine the net income: - Interest on fees and loans: $6,715 - Interest on repurchase agreements: $143 - Interest on other investment securities: $1,705 - Interest on deposits in banks: $60 **Total Interest Income:** $8,623 - Interest on deposits: $3,018 - Interest on debentures: $1,140 **Total Interest Expense:** $4,158 **Net Interest Income:** $4,465 - Provision for loan losses: $200 - Noninterest income: $950 - Noninterest expenses: $1,720 **Income Before Taxes:** $3,495 - Taxes: $1,220 **Net Income:** $2,275 ### Explanation The balance sheet reveals the total assets and liabilities, ensuring they are balanced at $137,950. The income statement displays interest incomes and expenses, along with noninterest factors, leading to a final net income of $2,275. Understanding these financial statements is crucial for assessing a bank’s economic health.
Transcribed Image Text:### Educational Website Content: Financial Statements Overview #### Balance Sheet (in millions) The balance sheet provides a snapshot of the bank's financial position, showing its assets, liabilities, and equity as follows: **Assets** - Cash and due from banks: $7,500 - Repurchase agreements: $13,000 - Other investment securities: $34,500 - Loans: $70,500 - Fixed assets: $9,250 - Other assets: $3,200 **Total Assets:** $137,950 **Liabilities and Equity** - Demand deposits: $15,500 - NOW accounts: $35,625 - Retail CDs: $57,000 - Debentures: $14,250 **Total Liabilities:** $122,375 **Equity** - Common stock: $5,000 - Paid-in capital: $4,000 - Retained earnings: $6,125 **Total Liabilities and Equity:** $137,500 #### Income Statement The income statement shows the bank's revenue and expenses to determine the net income: - Interest on fees and loans: $6,715 - Interest on repurchase agreements: $143 - Interest on other investment securities: $1,705 - Interest on deposits in banks: $60 **Total Interest Income:** $8,623 - Interest on deposits: $3,018 - Interest on debentures: $1,140 **Total Interest Expense:** $4,158 **Net Interest Income:** $4,465 - Provision for loan losses: $200 - Noninterest income: $950 - Noninterest expenses: $1,720 **Income Before Taxes:** $3,495 - Taxes: $1,220 **Net Income:** $2,275 ### Explanation The balance sheet reveals the total assets and liabilities, ensuring they are balanced at $137,950. The income statement displays interest incomes and expenses, along with noninterest factors, leading to a final net income of $2,275. Understanding these financial statements is crucial for assessing a bank’s economic health.
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