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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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