Onshore Bank has $36 million in assets, with risk-weighted assets of $26 million. Core Equity Tier 1 (CET1) capital is $1,350,000, additional Tier I capital is $370,000, and Tier II capital is $432,000. The current value of the CET1 ratio is 5.19 percent, the Tier I ratio is 6.62 percent, and the total capital ratio is 8.28 percent.
Calculate the new value of CET1, Tier I, and total capital ratios for the following transactions.
- The bank repurchases $116,000 of common stock with cash.
- The bank issues $3.6 million of CDs and uses the proceeds to issue category 1 mortgage loans with a loan-to-value ratio of 80 percent.
- The bank receives $516,000 in deposits and invests them in T-bills.
- The bank issues $816,000 in common stock and lends it to help finance a new shopping mall. The developer has an A+ credit rating.
- The bank issues $2.6 million in nonqualifying perpetual preferred stock and purchases general obligation municipal bonds.
- Homeowners pay back $5.6 million of mortgages with loan-to-value ratios of 40 percent and the bank uses the proceeds to build new ATMs.
