4. The latest report of condition and income and expense statement for Happy Merchants National Bank are as shown in the following tables: Happy Merchants National Bank Income and Expense Statement (Report of Income) $4 6 50 Interest and fees on loans Interest and dividends on securities Total interest income Interest paid on deposits Interest on nondeposit borrowings 32 Total interest expense 38 Net interest income 12 Provision for loan losses 1 Noninterest income and fees 16 Noninterest expenses: Salaries and employee benefits 10* Overhead expenses 5 Other noninterest expenses Total noninterest expenses 14 19 Net noninterest income -3 10 Pretax operating income Securities gains (or losses) 2 12 Pretax net operating income Таxes 2 Net operating income Net extraordinary income 10 -2 Net income 8 *Note: the bank currently has 40 FTE employees. Happy Merchants National Bank Report of Condition Liabilities Cash and deposits due from banks $90 Demand deposits 150 Savings deposits 10 Time deposits 670 Federal funds purchased Total liabilities Assets $190 Investment securities 180 Federal funds sold 470 Net loans 60 (Allowance for loan losses = 25) 900 |Equity capital 50 Common stock (Unearned income on loans = 5) Plant and equipment 20 Surplus 970 Retained earnings Total Equity Capital 810 Interest-bearing deposits 650| 25 35 Total assets 70 Total Earnings Assets
4. The latest report of condition and income and expense statement for Happy Merchants National Bank are as shown in the following tables: Happy Merchants National Bank Income and Expense Statement (Report of Income) $4 6 50 Interest and fees on loans Interest and dividends on securities Total interest income Interest paid on deposits Interest on nondeposit borrowings 32 Total interest expense 38 Net interest income 12 Provision for loan losses 1 Noninterest income and fees 16 Noninterest expenses: Salaries and employee benefits 10* Overhead expenses 5 Other noninterest expenses Total noninterest expenses 14 19 Net noninterest income -3 10 Pretax operating income Securities gains (or losses) 2 12 Pretax net operating income Таxes 2 Net operating income Net extraordinary income 10 -2 Net income 8 *Note: the bank currently has 40 FTE employees. Happy Merchants National Bank Report of Condition Liabilities Cash and deposits due from banks $90 Demand deposits 150 Savings deposits 10 Time deposits 670 Federal funds purchased Total liabilities Assets $190 Investment securities 180 Federal funds sold 470 Net loans 60 (Allowance for loan losses = 25) 900 |Equity capital 50 Common stock (Unearned income on loans = 5) Plant and equipment 20 Surplus 970 Retained earnings Total Equity Capital 810 Interest-bearing deposits 650| 25 35 Total assets 70 Total Earnings Assets
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Question
Calculate ROE,
Transcribed Image Text:4. The latest report of condition and income and expense
statement for Happy Merchants National Bank are as shown
in the following tables: Happy Merchants National Bank
Income and Expense Statement (Report of Income)
Interest and fees on loans
$44
Interest and dividends on securities
6
Total interest income
50
Interest paid on deposits
Interest on nondeposit borrowings
32
6|
Total interest expense
38
Net interest income
Provision for loan losses
Noninterest income and fees
12
1
16
Noninterest expenses:
Salaries and employee benefits 10*
Overhead expenses
5
Other noninterest expenses
4
Total noninterest expenses
19
Net noninterest income
-3
Pretax operating income
Securities gains (or losses)
Pretax net operating income
Таxes
10
2
12
2
Net operating income
Net extraordinary income
Net income
10
-2
8
*Note: the bank currently has 40 FTE
employees.
Happy Merchants National Bank
Report of Condition
Assets
Liabilities
$190
Cash and deposits due from banks $90 Demand deposits
Investment securities
Federal funds sold
Net loans
|(Allowance for loan losses = 25)
|150 Savings deposits
10 Time deposits
|670 Federal funds purchased
Total liabilities
180
470
60
900
(Unearned income on loans =
5)
|Equity capital
Plant and equipment
50 Common stock
20
|Surplus
970 Retained earnings
|Total Equity Capital
|810|Interest-bearing deposits 650
25
Total assets
35
70
Total Earnings Assets
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