Bank A Dollars in Millions 12 Points Assets Liabilities and

Bank A (Dollars in Millions)		12 Points
Assets				Liabilities and Equity
Cash	$850			Deposits		$6,475
Securities	$1,925			Other Borrowing	$1,645
Loans	$5,400			Equity		$1,030
Other	$975			Total		$9,150
Total	$9,150
Income Statement
Interest income on loans		$450
Interest income on securities	$95
Interest expense		$246
Noninterest income		$78
Noninterest expense		$112
Provision for loan losses		$35
Taxes			$115
Net Income			$115		$ 115 = (450 + 95 + 78 - 246 - 112 - 35 - 115)
For Bank A, calculate:
a.	Return on assets (ROA)
b.	Return on equity (ROE)
c.	The bank\'s profit margin
d.	The bank\'s utilization ratio
a.	Return on Assets =	(Net income / Total assets)
	ROA =	$115/$9,150 =
b.	Return on Equity =	Net income / Total equity capital
	ROE =	$115/$1,030 =
c.	Profit margin =	Net income / Total operating income
	Profit margin =	$115/($450 + $95 + $78) =
d.	Asset utilization =	Total operating income / Total assets
	Asset utilization =	($450 + $95 + $78)/$9,150 =

Solution

Return on Assets = (Net income / Total assets) = $115/$9150 0.012568 Return on Equity = Net income / Total equity capital = $115/$1030 0.11165 Profit margin = Net income / Total operating income = $115/($450 + $95 + $78) 0.184591 Asset utilization = Total operating income / Total assets = ($450 + $95 + $78)/$9,150 0.144809