Reference no: EM132828193
Onshore Bank has $33 million in assets, with risk-adjusted assets of $23 million. Core Equity Tier 1 (CET1) capital is $1,050,000, additional Tier I capital is $370,000, and Tier II capital is $426,000. The current value of the CET1 ratio is 4.57 percent, the Tier I ratio is 6.17 percent, and the total capital ratio is 8.03 percent.
Calculate the new value of CET1, Tier I, and total capital ratios for the following transactions.
-The bank repurchases $113,000 of common stock with cash.
-The bank issues $3.3 million of CDs and uses the proceeds to issue category 1 mortgage loans with a loan-to-value ratio of 70 percent.
-The bank receives $513,000 in deposits and invests them in T-bills.
-The bank issues $813,000 in common stock and lends it to help finance a new shopping mall. The developer has an A+ credit rating.
-The bank issues $2.3 million in nonqualifying perpetual preferred stock and purchases general obligation municipal bonds.
-Homeowners pay back $5.3 million of mortgages with loan-to-value ratios of 50 percent and the bank uses the proceeds to build new ATMs.
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