Question

The financial statements for First National Bank (FNB) are shown below: Balance Sheet First National Bank...

The financial statements for First National Bank (FNB) are shown below:

Balance Sheet First National Bank
Assets Liabilities and Equity
Cash $ 580 Demand deposits $ 6,530
Demand deposits from other FIs 2,000 Small time deposits 10,300
Investments 4,700 Jumbo CDs 3,850
Federal funds sold 2,415 Federal funds purchased 2,900
Loans 16,825 Equity 2,850
Reserve for loan losses (2,425 )
Premises 2,335
Total assets $ 26,430 Total liabilities/equity $ 26,430
Income Statement First National Bank
Interest income $ 3,250
Interest expense 2,100
Provision for loan losses 310
Noninterest income 270
Noninterest expense 550
Taxes 90

a. Calculate the dollar value of FNB’s earning assets.
b. Calculate FNB’s ROA. (Round your answer to 2 decimal places. (e.g., 32.16))
c. Calculate FNB’s asset utilization ratio. (Round your answer to 2 decimal places. (e.g., 32.16))
d. Calculate FNB’s spread. (Round your answer to 2 decimal places. (e.g., 32.16))

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Homework Answers

Answer #1

Solution:-

A. To Calculate the dollar value of FNB’s earning assets-

Earning Assets = Investment securities + Net Loans

Earning Assets = $4,700 + $2,415 + $16,825 - $2,425

Earning Assets = $21,515

B. To Calculate FNB’s ROA-

ROA =

ROA =

ROA = 1.78%

C. To Calculate FNB’s asset utilization ratio -

Asset Utilization =

Asset Utilization =

Asset Utilization = 13.32%

D. To Calculate FNB’s spread -

Spread =

Spread =

Spread =

Spread = 2.79%

If you have any query related to question then feel free to ask me in a comment.Thanks. Please rate.

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