《商业银行管理》课后习题答案Problems4.doc 6页

'Problems4-1.ThemissingitemsfromtheReportofConditionandReportofIncomeofEvergreenNationalBankaregivenbelow:ReportofConditionItemsfromBanks$27(550-43-18-10-348-11-6-87=27)GrossLoans373(348+6+19=373)SavingsDepositsandNOWAccounts36(440-21-227-49-107=36)Stockholders"EquityCapital50(550-440-41-19=50)ReportofIncomeItemsInterestandFeesonLoans$168(180-5-7=168)ServiceChargesonCustomerDeposits11(39-20-8=11)Wages,Salaries,andEmployeeBenefits42(54-5-7=42)NetInterestIncome21(180-159=21)NetNoninterestIncome-15(39-54=-15)NetIncomeAfterTaxes0(180+39-159-54-4-2=-120)AlternativeScenario1:Given:Totalrevenuesincreaseto$225,totalinterestexpenseincreasesto$185,totalnoninterestincomeincreasesto$51,andtotalnoninterestexpensesincreaseto$72.Solution:NetIncomeaftertaxes=$225-185-72-4-2=-$38AlternativeScenario2:Given:Allrevenueitemsincreaseby100%andallexpenseitemsincreaseby92%.6 Solution:NetIncomeaftertaxes=[($180+39)X2]-[($159+54+4+2)X1.921=[$219X2]-[$339X1.92]=$438-$421=$174-2.Theitemsrequiringcalculationandtheirdollaramountsare:NetInterestIncome=TotalInterestIncome-TotalInterestExpense=$271-$205=$66NetNoninterestIncome=TotalNoninterestIncome-TotalNoninterestExpense=$23-$40=-$17TotalOperatingRevenues=TotalInterestIncome+TotalNoninterestIncome=$271+$23=$294TotalOperatingExpense=TotalInterestExpenses+TotalNoninterestExpenses+ProvisionforLoanLoss=$205+$40+$13=$258NetIncomeBeforeTaxes=TotalOperatingRevenues-TotalOperatingExpenses=$294-$258=$36NetIncomeAfterTaxes=NetIncomeBeforeTaxes-IncomeTaxes=$36-$5=$31IncreaseinBank"sUndividedProfits=NetIncomeAfterTaxes-CommonDividends=$31-$11=$20AlternativeScenario1:Given:GapbetweenTotalInterestIncomeandTotalInterestExpensesdecreasesby10percent.Solution:NetIncomeAfterTaxes=[($271-$205)X0.9]+$23-$40-$13-$5=$59.4+$23-$40-$13-$5=$24.4Thisisadecreaseof$6.6($31-$24.4)ora21.3%decreaseasaresultofapercentdecreaseintheinterestrevenue-expensegap.AlternativeScenario2:6 Given:ProvisionforLoanLosstriples(from$13to$39).Solution:NetIncomeAfterTaxes=$271-$205+$23-$40-$39-$5=$5Thisisadecreaseof$26($31-$5)oran83.9%decrease.4-3.Theitemsrequiringcalculationandthedollarfiguresrequiredare:TotalAssets=TotalLiabilities+Stockholders"Equity=$380+$49=$429.NetLoans=GrossLoans-AllowanceforLoanLosses-UnearnedDiscountonLoans=$294-$13-$5=$276UndividedProfits=TotalEquityCapital-CapitalReserves-Surplus-CommonStock–PreferredStock=$49-$8-$11-$12-$3=$15InvestmentSecurities=TotalAssets-MiscellaneousAssets-NetBankPremises-Customers"LiabilityonAcceptances-NetLoans-TradingAccountSecurities-FederalFundsSold-CashandDuefromBanks=$429-$38-$29-$7-$276-$2-$26-$9=$42Depreciation=GrossBankPremises-NetBankPremises=$34-$29=$5TotalDeposits=TotalLiabilities-NondepositBorrowings-AcceptancesOutstanding=$380-$10.-7=$363.Thereadershouldnotethattheassetitem,CustomerLiabilityonAcceptances,shouldhaveanequalliabilityitem,AcceptancesOutstanding.AlternativeScenario1:Given:AllAssetsandallLiabilitiesdouble.Solution:TotalEquityCapital=TotalAssets-TotalLiabilities=($429X2)($380X2)=$858-$760=$98Therefore,TotalEquity,asexpected,wouldalsodouble.UndividedProfits=TotalEquityCapital-CapitalReserves-Surplus-CommonStock–PreferredStock=$98-$8-$11-$12-$3=$646 Thisrepresentsanincreaseof$49($64-$15),orovera300%increase,andresultsfromthedoublingoftotalequitywithoutconcurrentincreasesinCommonorPreferredStockIssues,whichwouldalsocausechangesinCapitalReservesandSurplus.4-8.ThebalancesheetforRiver"sEdgeNationalBankshouldappearasfollows:BalanceSheet(ReportofCondition)AssetsLiabilitiesCash$13Demanddeposits55DepositsduefromTimedeposits40otherbanks25Moneymarketdeposits31U.S.Treasurybills10Depositsduetootherbanks5Municipalbonds12Federalfundspurchased34FederalfundssoldandSecuritiessoldunderrepurchasesecurityRPs5agreements4LoanstocommercialMortgagesagainstthebank"sandindustrialfirms64building26Automobileloans21Subordinatednotesand20Creditcardloans22debenturesRealestateloans42EquityLeasesofassetstoEquitycapital9businesscustomers3Totalliabilitiesandequitycapital$224Bankbuildingandequipment7Totalassets$224Clearly,equitycapitalof$9millionmustbeaddedtobringthebank"sbalancesheetfullyintobalance.4-9.TheincomestatementforRosebushStateBankshouldbearrangedasfollows:6 InterestandFeesonLoans$62InterestandDividendsEarnedonGovernmentBondsandNotes$9TotalInterestIncome71Interestpaidtocustomersholdingtimeandsavingsdeposits32Interestpaidonfederalfundspurchased6TotalInterestExpense38Netinterestincome33Servicechargespaidbydepositors4Trustdepartmentfees1Totalnoninterestincome5Employeewages,salaries,andbenefits13Overheadexpenses3Provisionforloanlosses2Depreciationonthebank"splantandequipment8Totalnoninterestexpenses26Netincomebeforetaxes12Taxespaid3Dividendspaidtocommonstockholders2Retainedearnings74-10.Theitemswhichwouldnormallyappearonabank"sbalancesheetare:FederalfundssoldSavingsdepositsCreditcardloansCommonstockVaultcashMortgageowedonthebank"sbuildingAllowanceforloanlossesUndividedprofitsDepositsduetobanksCustomerliabilityonacceptancesLeasesofbusinessRetainedearnings6 equipmenttocustomersTheitemsnormallyshowinguponabank"sincomestatementare:DepreciationofbankSecuritiesgainsorlossesPlantandequipmentEmployeebenefitsInterestreceivedoncreditServicechargesondepositscardloansUtilityexpensesInterestpaidonmoneymarketdeposits4-11.Thefollowingitemsarecalculatedgiventheinformationintheproblem.NetInterestIncome=TotalInterestIncome–TotalInterestExpenses750=X-.5XTotalInterestIncome=$1500TotalInterestExpenses=$750NetNoninterestIncome=TotalNoninterestIncome–TotalNoninterestExpenses-$300=.75X–XTotalNoninterestExpenses=$1200TotalNoninterestIncome-=$900PLL=.01*TotalInterestIncome=.01*1500=$15Taxes=.25*NetIncomeBeforeTaxes=.25*45=$11.25Dividends=.5*NetIncome=.5*$20=$106'