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c. Based on the totals for assets and liabilities, determine the amount in the owners’ capital account.
Capital Account= Assets – Liabilities Let’s assume that you have been asked to calculate risk-based capital ratios for a bank with the following accounts: Cash _ $5 million Government securities _ $7 million Mortgage loans _ $30 million Other loans _ $50 million Fixed assets _ $10 million Intangible assets _ $4 million Loan-loss reserves _ $5 million Owners’ equity _ $5 million Trust-preferred securities _ $3 million (Cash assets and government securities are not considered risky. Loans secured by real estate have a 50 percent weighting factor. All other loans have a 100 percent weighting factor in terms of riskiness. a. Calculate the equity capital ratio.)b. Calculate the Tier 1 Ratio using risk-adjusted assets.