Derby Bank has total assets of $350 million, and the risky portion of the assets consist of $100 million of home mortgages and $200 million of commercial loans. The bank has an allowance for loan & lease losses or ALL of 3 million, subordinated debt of $5 million, preferred stock of $5 million, and common stock of $25 million. Under the new or curent U.S. Prompt Corrective Action (PCA) rules what class of capitalization does this bank possess? Also, what is the ratio of total capital (tier1 + tier 2) to risk weighted assets (RWA). A. Well capitalized; total capital ratio of 14.0% B. Adequately capitalized; total capital ratio of 10.8% C . Well capitalized; total capital ratio of 15.2% D. Well capitalized; total capital ratio of 12.0% E. Adequately capitalized; total capital ratio of 12.0%

Derby Bank has total assets of $350 million, and the risky portion of the assets consist of $100 million of home mortgages and $200 million of commercial loans. The bank has an allowance for loan & lease losses or ALL of 3 million, subordinated debt of $5 million, preferred stock of $5 million, and common stock of $25 million. Under the new or curent U.S. Prompt Corrective Action (PCA) rules what class of capitalization does this bank possess? Also, what is the ratio of total capital (tier1 + tier 2) to risk weighted assets (RWA). A. Well capitalized; total capital ratio of 14.0% B. Adequately capitalized; total capital ratio of 10.8% C . Well capitalized; total capital ratio of 15.2% D. Well capitalized; total capital ratio of 12.0% E. Adequately capitalized; total capital ratio of 12.0%

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Description: Derby Bank has total assets of $350 million, and the risky portion of the assetsconsist of $100 million of home mortgages and $200 million of commercial loans.The bank has an allowance for loan & lease losses or ALL of 3 million,subordinated debt of

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

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Concept explainers

Financial Ratios

A Ratio refers to a figure calculated as a reference to the relationship of two or more numbers and can be expressed as a fraction, proportion, percentage, or the number of times. When the number is determined by taking two accounting numbers derived from the financial statements, it is termed as the accounting ratio.

Return on Equity

The Return on Equity (RoE) is a measure of the profitability of a business concerning the funds by its stockholders/shareholders. ROE is a metric used generally to determine how well the company utilizes its funds provided by the equity shareholders.

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Question

Derby Bank has total assets of $350 million, and the risky portion of the assets
consist of $100 million of home mortgages and $200 million of commercial loans.
The bank has an allowance for loan & lease losses or ALL of 3 million,
subordinated debt of $5 million, preferred stock of $5 million, and common stock
of $25 million. Under the new or curent U.S. Prompt Corrective Action (PCA)
rules what class of capitalization does this bank possess? Also, what is the ratio of
total capital (tier1 + tier 2) to risk weighted assets (RWA). A. Well capitalized;
total capital ratio of 14.0% B. Adequately capitalized; total capital ratio of 10.8% C
. Well capitalized; total capital ratio of 15.2% D. Well capitalized; total capital ratio
of 12.0% E. Adequately capitalized; total capital ratio of 12.0%

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