Practical Problem:

5-1. Report of Condition  

Total assets $4,000.00

Cash and due from depository institutions 90.00

Securities 535.00

Federal funds sold and reverse repurchase agreements 45.00

Gross loans and leases  ????

Loan loss allowance 200.00

Net loans and leases 2,700.00

Trading account assets 20.00

Bank premises and fixed assets  

Other real estate owned 15.00

Goodwill and other intangibles 200.00

All other assets 175.00

Total liabilities and capital  ??????

Total liabilities  ?????

Total deposits  ??????

Federal funds purchased and repurchase agreements. 80.00

Trading liabilities 10.00

Other borrowed funds 50.00

Subordinated debt 480.00

All other liabilities 40.00

Total equity capital  ????

Perpetual preferred stock 5.00

Common stock 25.00

Surplus 320.00

Undivided profits 70.00

 Solution:
Report of Condition  

Total assets $4,000.00

Cash and due from depository institutions 90.00

Securities 535.00

Federal funds sold and reverse repurchase agreements 45.00

Gross loans and leases $2,900.00

Loan loss allowance 200.00

Net loans and leases 2,700.00

Trading account assets 20.00

Bank premises and fixed assets 220.00

Other real estate owned 15.00

Goodwill and other intangibles 200.00

All other assets 175.00

Total liabilities and capital 4,000.00c

Total liabilities 3,580.00d

Total deposits 2,920.00e

Federal funds purchased and repurchase agreements. 80.00

Trading liabilities 10.00

Other borrowed funds 50.00

Subordinated debt 480.00

All other liabilities 40.00

Total equity capital 420.00f

Perpetual preferred stock 5.00

Common stock 25.00

Surplus 320.00

Undivided profits 70.00

 
a. Gross loans and leases = Net loans and leases + Loan loss allowance
($200.00 + $2,700.00)
b. This is the only asset missing and so it is total assets less all of the rest of the assets listed above.
($4,000.00 − $90.00 − $535.00 − $45.00 − $2,700.00 − $20.00 − $15.00 − $200.00 − $175.00)
c. Total liabilities and capital = Total assets ($4,000.00)
d. Total liabilities = Total liabilities and capital − Total equity capital ($4,000.00 − $420.00)
e. Total deposits = Total liabilities − All of the other liabilities ($3,580.00 − $80.00 − $10.00 − $50.00
− $480.00 − $40.00)
f. Total equity capital = Perpetual preferred stock + Common stock + Surplus + Undivided profit ($5.00
+ $25.00 + $320.00 + $70.00)
  5.2 Along with the Report of Condition submitted above, Norfolk has also prepared a Report  
of Income for the FDIC. Please fill in the missing items from its statement shown below (all
figures in millions of dollars):
Report of Income  

Total interest income $200

Total interest expense  

Net interest income 60

Provision for loan and lease losses  

Total noninterest income 100

Fiduciary activities 20

Service charges on deposit accounts 25

Trading account gains and fees  

Additional noninterest income 30

Total noninterest expense 125

Salaries and employee benefits  

Premises and equipment expense 10

Additional noninterest expense 20

Pretax net operating income 15

Securities gains (losses) 5

Applicable income taxes 3

Income before extraordinary items  

Extraordinary gains—net 2

Net income  

   

 
Report of Income  

Total interest income $200

Total interest expense 140a

Net interest income 60

Provision for loan and lease losses 20b

Total noninterest income 100

Fiduciary activities 20

Service charges on deposit accounts 25

Trading account gains and fees 25c

Additional noninterest income 30

Total noninterest expense 125

Salaries and employee benefits 95d

 Premises and equipment expense 10

Additional noninterest expense 20

Pretax net operating income 15

Securities gains (losses) 5

Applicable income taxes 3

Income before extraordinary items 17e

Extraordinary gains—net 2

Net income 19f

a. Total interest expense = Total interest income − Net interest income ($200 − $60)
b. Provision for loan and lease losses = Net interest income + Total noninterest income −
Total noninterest expense − Pretax net operating income (60 + $100 – $125 – $15)
c. There are four areas of Total noninterest income and only one is missing and the total is
given. ($100 − $20 − $25 − $30)
d. There are three areas of Total noninterest expense and only one is missing and the total is
given ($125 – $10 – $20)
e. Income before extraordinary items = Pretax income + Security gains – Taxes ($15 + $5 –
$3)
f. Net income = Income before extraordinary items + Extraordinary gains—net ($17 + $2)

  5.3   If
you know the following figures:  
Total interest income $140 Provision for loan losses $5

Total interest expenses 100 Income taxes 4

Total noninterest income 75 Increases in bank’s undivided profits 6

Total noninterest expenses 90    

 
Please calculate these items:

Net interest income  

Net noninterest income  

Pretax net operating income  

Net income after taxes  

Total operating revenues  

Total operating expenses  

Dividends paid to common stockholders