Solution-Evaluate the funding mix of deposits

Evaluate the funding mix of deposits

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Reference no: EM131721654

Question: Exeter national banks report the following figure in its current report of condition:

Assets (millions)		Liabilities (millions)
Cash and interbank deposes	$50	Core deposits	$50
Short-term security investments	15	Large negotiable CDs	150
Total loans. gross	375	Deposits placed by brokers	65
Long-term securities	150	Other deposits	140
Other assets	10	Money market liabilities	95
Total assets	$600	Other liabilities	70
		Equity capital	30
		Total liabilities and equity capital	$600

a. Evaluate the funding mix of deposits and non deposit sources of funds employed by Exeter. Given the mix of its assets, do you see any potential problems? What changes would you like to see management of this bank make? Why?

b. Suppose market interest rates are projected to rise significantly. Does Exeter appear to face significant losses due to liquidity risk? Due to interest rate risk? Please be as specific as possible.

Reference no: EM131721654

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Evaluate the funding mix of deposits

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Reference no: EM131721654

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