1. Given the following information on the revenues and expenses of First National Bank, determine the bank's net income after taxes for the year just concluded. Salaries and employee benefits $80,000 Interest on deposits 170,000 Interest on loans 320,000 75,000 Income from the U.S. Treasury securities Extraordinary items, net -0Interest on nondeposit borrowings 30,000 Net securities gains -0Interest on Loans Interest from U.S. Treasury Securities Interest from Municipal Securities* Service Charges on Deposits Misc. Operating Revenues Total Operating Income The Bank’s Operating Expenses include Salaries and Employee Benefits Interest on Deposits Interest on Nondeposit Borrowings Occupancy Costs Provisions for Loan Losses Misc. Expenses Total Operating Expenses Net Operating Income ($504,000 - $321,000)= Less: Applicable Income Taxes Net Income after Taxes and Before Extraordinary Charges Less: Extraordinary Items (including securities gains and losses) Net Income After Taxes $ 80,000 170,000 30,000 11,000 22,000 8,000 $321,000 $183,000 -50,000 $133,000 0 $133,000
Applicable income taxes Occupancy costs Provision for loan losses Miscellaneous expenses Interest on municipal securities Service charges on deposits Miscellaneous operating revenues
$50,000 11,000 22,000 8,000 86,000 10,000 13,000
1. The Bank’s Operating Income is:
$320,000 75,000 86,000 10,000 13,000 $504,000
*Expressed on a taxable-equivalent basis. Income taxes are adjusted accordingly.
2. Construct the report of condition (balance sheet) for First National Bank for December 31 of the year just ended from following information. Equity capital Demand deposits Savings deposits Time deposits Federal funds borrowings Cash and due from banks Other assets $50 million 100 million 150 million 200 million 12 million 20 million 50 million Real estate loans $60 million U.S. Treasury securities 25 million Commercial and industrial loans300 million Other liabilities 38 million Municipal securities 55 million Loans to individuals 40 million
Assets Cash and Due From Banks U.S. Treasury Securities Municipal Securities Commercial and Industrial Loans Real Estate Loans Loans to Individuals Other Assets Total Assets
$20 Million 25 Million 55 Million 300 Million 60 Million 40 Million 50 Million $550Million
Liabilities and Equity Demand Deposits $100Million Savings Deposits 150 Million Time Deposits 200 Million Federal Funds Borrowings 12 Million Other Liabilities 38 Million Equity Capital 50 Million Total Liabilities and Equity $550Million Capital
3. Suppose you have been given the financial information below for a commercial bank: Income taxes owed $13 Noninterest revenues from service fees 70 Interest revenues from loans 129 Interest and dividends from 26 investments in securities Dividends paid to stockholders 4 Interest paid to depositors Interest on non deposit borrowings Salaries and wages of bank employees
Overhead costs Loan-loss provision Securities gain (or losses)
3 2 0
a. Please calculate this bank's net interest income, net noninterest income, net income before taxes, net income after taxes, undivided profits (or retained earnings), total revenues, and total expenses. b. Suppose the above bank's return on assets – the ratio of its net income after taxes to total assets – is 0.85 percent. What is the total of the bank's assets in dollars? c. Suppose this bank's return on stockholder's equity capital – the ratio of its net income after taxes to total equity capital – is 12 percent. What is the bank's total equity capital in dollars? d. Suppose the above bank's total deposits equal 75 percent of its total liabilities. How many deposits in total dollar volume does the bank hold? a. The bank’s net interest income = $129 + 26 - 64 - 8 = $83. Net noninterest income = $70 - 27- 3 = $40. Then net income before taxes = $83 + $40 -$2= $121. With taxes owed of $13 net after-tax income must be $108. With dividends of $4,...
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