Question

Chapter 05 Banking Strategies and Policies
Problem 04
Input Area:
Gross loans	$300
Allowance for loan losses	$15
Investment Securities	$36
Common stock	$5
Surplus	$15
Total equity capital	$30
Cash and due from banks	$10
Miscellaneous assets	$25
Bank premises and equipment, gross	$25
Trading-account securities	$2
Other real estate owned	$4
Goodwill and other intangibles	$3
Total liabilities	$375
Preferred stock	$3
Nondeposit borrowings	$40
Bank premises and equipment, net	$20
Output Area:
Total assets
Net loans
Undivided profits
Fed Funds Sold
Depreciation
Total deposits

Answer 1

A) Total assets :  Total liabilities + Total equity capita

l =$30 + $375 =$ 405

B) Net loans: Gross loans – Allowances for loan losses

=300 - 15 =$285

C) Undivided profits: Total equity capital – Preferred stock – Common stock – Surplus

=$30 – $3 – $5 – $15 =$7

D) Fed Funds Sold: It is only asset that is missing so all other assets will be subtracted from total assets to derive fed funds sold balance = Total Assets - Gross loans -Investment Securities -Cash and due from banks - Miscellaneous assets - Bank premises and equipment, net - Trading-account securities - Other real estate owned -Goodwill and other intangibles

=$405 – 300 – 36- 10 -25- 20 -2-4-3 =$5

E) Depreciation: Bank premises and equipment, gross - Bank premises and equipment, net

=25-5 = $5

F)Total deposits: Total liabilities – non deposit borrowings

= $375 – $40 =$335