商業(yè)銀行-答案(美國版第8)-15

PAGEPAGE219CHAPTER15THEMANAGEMENTOFCAPITALGoalofThisChapter：Thepurposeofthischapteristodiscoverwhycapital–particularlyequitycapital–issoimportantforfinancialinstitutions,tolearnhowmanagersandregulatorsassesstheadequacyofaninstitution'scapitalposition，andtoexplainthewaysthatmanagementcanraisenewcapital.KeyTopicsinThisChapterTheManyTasksofCapitalCapitalandRiskExposuresTypesofCapitalInUseCapitalastheCenterpieceofRegulationBaselIandBaselIIPlanningtoMeetCapitalNeedsChapterOutlineI。 Introduction： WhatIsCapital？II。 TheManyTasksCapitalPerformsA. CushionAgainstRiskofFailureB。 ProvidesFundsNeededtoBeginOperationsC. PromotesPublicConfidenceD。 ProvidesFundsforFutureGrowthandNewServicesRegulatorofGrowthCapitalPlaysaRoleinMergersLimitsHowMuchRiskExposureBanksandCompetingFirmsCanAcceptProtectstheGovernment’sDepositInsuranceSystemIll. CapitalandRiskA。 KeyRisksinBankingandFinancialInstitutions’Management1. CreditRisk2. LiquidityRisk3. Interest—RateRisk4. OperatingRisk5. ExchangeRisk6. CrimeRiskB。 DefensesagainstRisk1。 QualityManagement2. Diversificationa. Portfoliob。 Geographic

3。 DepositInsurance4. Owners’CapitalIV。 TypesofCapitalA. CommonStockB. PreferredStockC. SurplusD。 UndividedProfitsE。 EquityReservesF. SubordinatedDebenturesG。 MinorityInterestinConsolidatedSubsidiariesH。 EquityCommitmentNotesI。 RelativeImportanceoftheDifferentSourcesofCapitalV. OneoftheGreatIssuesintheHistoryofBanking：HowMuchCapitalIsReallyNeeded?A. RegulatoryApproachtoEvaluatingCapitalNeeds1. ReasonsforCapitalRegulation2。 ResearchEvidenceVI. TheBasleAgreementonInternationalCapitalStandards:AnHistoricContractamongLeadingNations A. BaselI1. TierOneCapital2. TierTwoCapital3。 CalculatingRisk—WeightedAssetsUnderBasleI4。 CalculatingtheCapital—toRisk-WeightedAssetsRatioUnderBaselIB。 CapitalRequirementsAttachedtoDerivatives1. BankCapitalStandardsandMarketRisk2。 MarketRiskandValueatRisk（VaR)Models3。 ValueatRisk（VAR)Models4. LimitationsandChallengesofVaRandInternalModelingC。 BaselII:ANewCapitalAccordUnfolding 1。 PillarsofBaselIIInternalRiskAssessmentOperationalRiskBaselIIandCreditRiskModelsADual(Large-Bank,Small-Bank）SetofRulesProblemsAccompanyingtheImplementationofBaselIIVII。 ChangingCapitalStandardsInsidetheUnitedStates A. FDICImprovementAct B. PromptCorrectiveAction 1. WellCapitalized 2. AdequatelyCapitalized 3. Undercapitalized 4. SignificantlyUndercapitalized 5。 CriticallyUndercapitalized

VIII. PlanningToMeetCapitalNeedsA. RaisingCapitalInternally1。 DividendPolicy2. HowFastMustInternallyGeneratedFundsGrow?B。 RaisingCapitalExternally1. IssuingCommonStock2. IssuingPreferredStock3。 IssuingSubordinatedNotesandDebentures4. SellingAssetsandLeasingFacilities5。 SwappingStockforDebtSecurities6。 ChoosingtheBestAlternativeforRaisingOutsideCapitalIX. SummaryoftheChapterConceptChecks15—1。 Whatdoesthetermcapitalmeanasitappliestofinancialinstitutions？Fundscontributedtoafinancialinstitutionprimarilybyitsowners,consistingmainlyofstock，reserves，andretainedearnings,plusanylong—termdebtissuedthatqualifiesunderregulations.15-2. Whatcrucialroledoescapitalplayinthemanagementandviabilityoffinancialfirm?Capitalprovidesthelong—term，permanentfundingthatisneededtoconstructfacilitiesandprovideabaseforthefutureexpansionofassets.Capitalalsoabsorbsoperatinglossesuntilmanagementhasachancetocorrecttheinstitution’sproblems.Fromaregulatoryperspectivecapitallimitsthegrowthofriskyassets.15—3. Whatarethelinksbetweencapitalandriskexposureamongfinancialserviceproviders?Capitalfunctionsasacushiontoabsorblossesuntilmanagementcancorrecttheproblemsgeneratingthoselosses.Institutionsfacemanydifferentkindsofrisk:(1)crimerisk,（2）interest—raterisk，(3)creditrisk，(4）liquidityrisk,（5）exchangeriskand（6）operationalrisk。Capitalrepresentstheultimatelineofdefenseagainsttheseriskswhenallotherdefensesfail.15—4。 Whatformsofcapitalareinusetoday？Whatarethekeydifferencesbetweenthedifferenttypesofcapital?Theprincipalformsofbankcapitalincludecommonandpreferredstock,surplus,retainedearnings，andsubordinatednotesanddebentures.Commonstockrepresentstheparvaluepaidbyowners,whilesurplusistheamountpaidoverparvalueforthestockwhenitisfirstsold.Preferredstockisaspecialtypeofownershipwheredividendsarefixedandstockholdersgenerallydonothaveavoteonmajoractivitiesundertakenbythefirm。Retainedearningsaretheaccumulatedearningsofthefirmkepttoreinvestbackinthecompany。Subordinatednotesanddebenturesarelongtermdebtinstrumentsthatdonnotrepresentownershipclaims。

15—5. Measuredbyvolumeandpercentageoftotalcapital，whatarethemostimportantandleastimportantformsofcapitalheldbyU。S.—insuredbanks？Whydoyouthinkthisisso?Themostimportantformofcapitalissurplus，followedbyretainedearnings，subordinatednotesanddebenturesandpreferredstock。Commonstockrepresentswhatownerscontributeoriginallywhentheybuythestocktobeginwith。Retainedearningsrepresentthegrowthinearningsthataccumulateinthefirmovertime.Whattheownerscontributetothefirmandthewealththataccumulatesovertimearethetruecushionagainstlossthatcapitalrepresents.15-6. Howdosmallbanksdifferfromlargebanksinthecompositionoftheircapitalaccountsandinthetotalvolumeofcapitaltheyholdrelativetotheirassets？Whydoyouthinkthesedifferencesexist？Smallbanksrelymainlyonretainedearningsandverylittleonlongtermdebt,whereaslargebanksrelyoncommonstock,retainedearningsandlongtermdebt。Smallbankshaveadifficulttimetoplacetheirequityanddebtsecuritiesinthemarketandthus,relymoreheavilyoninternalcapital(i.e。retainedearnings）15-7 Whatistherationaleforhavingthegovernmentsetcapitalstandardsforfinancialinstitutions，asopposedtolettingtheprivatemarketplacesetthosestandards？Thegovernment’sinterestincapitalstemsfromitseffortstostabilizethefinancialsystemandavoiddrainsonthefederalinsurancesystem.Capitalrequirementshavelongbeensubjecttogovernmentregulation,thoughbankersfrequentlyarguethatthemarket，ratherthanregulators，shoulddeterminehowmuchcapitalafinancialinstitutionshouldhold。Thefearamongregulators,however，isthatfinancialinstitutionswouldholdtoolittlecapitaltoavoidexcessivenumbersoffailuresandthattheprivatemarketcannotadequatelyassesstheirneedforcapital.15-8。 Whatevidencedoesrecentresearchprovideontheroleoftheprivatemarketplaceindeterminingcapitalstandards？Theresultsofrecentstudiesarevaried,butmostfindthattheprivatemarketplaceismoreimportantthangovernmentregulationindeterminingtheamountandtypeofcapitalfinancialinstitutionsmusthold。However，governmentregulationapparentlywasatleastasimportantinthe1980sandearly1990s,withthetighteningofcapitalregulationsandtheimpositionofminimumcapitalrequirements.15-9. Accordingtorecentresearch,doescapitalpreventafinancialinstitutionfromfailing？Ifcapitalislargeenoughtoabsorboperatinglossesitcanpreventfailureforatime,atleastuntilthecapitalisallusedup.However，thereisnosolid,undisputedevidenceofasignificantrelationshipbetweenthesizeofthecapital—to—assetratioandtheincidenceoffailure。15—10。 Whatarethemostpopularfinancialratiosregulatorsusetoassesstheadequacyofbankcapitaltoday？

Theprimecapital-adequacyratiosaretotalcapitaltoassets,equitycapitaltoassets，totalcapitaltoriskassets,andprimaryorcorecapitalandsupplementaryorsecondarycapitaltototalassetsandtorisk—adjustedassets。15-11. Whatisthedifferencebetweencore(ortier1）capitalandsupplemental（ortier2）capital?Corecapitalisthepermanentcapitalofabank，consistingmainlyofcommonstock，surplus,retainedearnings,andequityreserves.Supplementalcapitalissecondaryformsofbankcapital，suchasdebtsecuritiesandlimited-lifepreferredstockandafewqualifiedintangiblesassets.15—12. Abankreportsthefollowingitemsonitslatestbalancesheet:AllowanceforLoanandLeaseLosses$42million；UndividedProfits$81million;SubordinatedDebtCapital＄3million;CommonStockandSurplus＄27million;EquityNotes$2million；MinorityInterestinSubsidiaries＄4million；MandatoryConvertibleDebt＄5million;IdentifiableIntangibleAssets$3million；andNoncumulativePerpetualPreferredStock＄5million。HowmuchdoesthebankholdinTier1capital?InTier2capital?DoesthebankhavetoomuchTier2capital?TheTier1capitalitemsinclude:TheTier2capitalitemsinclude：Commonstockandsurplus$27mill.AllowanceforLoanandLeaseLosses＄42mill。UndividedProfits81SubordinatedDebtCapital3NoncumulativePerpetualMandatoryConvertibleDebt5PreferredStock5EquityNotes2MinorityinterestinIdentifiableIntangibleAssets3Subsidiaries4TotalTier1Capital＄117mill.TotalTier2Capital＄55mill.ThebankdoesnothavetoomuchTier2capital。Tier2capitalcanbeupto100percentoftheamountofTier1capitalandstillcounttowardmeetingcapitalrequirements.15—13。 WhatchangesintheregulationofbankcapitalwerebroughtintobeingbytheBaselAgreement?WhatisBaselI?BaselII？U.S。banks，alongwithinternationalbanksfromotherindustrializednations,mustholdacoreorTier1（permanent)capitalratiotorisk-adjustedassetsof4percentandanadditional4percentinsupplementaryorsecondarycapital，underthetermsoftheBaselAgreementoninternationalcapitalstandards.BaselIreferstothecapitalstandardsthatareineffecttoday。BaselIIisanewcapitalrequirementaccordthatissupposedtoaddresstheweaknessesofBaselI.Itisscheduledtobephasedinstartingin2008.15-14. FirstNationalBankreportsthefollowingitemsonitsbalancesheet：cash$200million；U.S.governmentsecurities$150million;residentialreal-estateloans＄300million；andcorporateloans$350million.Itsoff-balance-sheetitemsinclude:standbycreditletters,＄20millionandlong—termcreditcommitmentstocorporations,＄160million。WhatareFirst

National’stotalrisk—weightedassets？IfthebankreportsTierIcapitalof$30millionandTier2capitalof$20million，doesithaveacapitaldeficiency？Wefirstconverttheoff—balance-sheetitemstotheircredit—equivalentamounts:Off-Balance—SheetItemsStandbyCreditLetters$20mill.＊1。00=＄20mill.Long-TermCommitmentstoCorporations＄160mill.＊0。50=80mill.Thenwerisk-weightallassets:Risk-WeightedAssetsCash＄200mill。＊0=＄0mill。U。S.GovernmentSecurities:$150mill。＊0=0StandbyCreditLetters：$20mill。＊0。20=4ResidentialRealEstateLoans：$300＊0.50=150CorporateLoans:$350*1。00=350Long—TermCreditCommitments：$80*1.00=80TotalRisk-WeightedAssets=$584Thebankhastotalcapitalof:Tier1capital=＄30mill。Tier2capital=$20mill.＄50mill。Thebank'scapitaltorisk-weightedassetratiois:$50mill.=0.086or8。6%$584mill。whichexceedstheminimumrequirementof8percent.Moreover,morethan4percentofthe8.6percentincapitalisTier1capital，sothebanksatisfiesthecapitalrequirements.15—15. HowistheBaselAgreementlikelytoaffectabank’schoicesamongassetsitwouldliketoacquire？

UnderthecapitalstandardsbroughtintobeingbytheBaselAgreement,differingriskweightswillapplytodifferentkindsofbankassets.Eachdollarofhigh—riskassets，suchascorporateloansandhomemortgages，requiresagreaterproportionofbankcapitalpledgedbehinditthanadollaroflow—riskassets,suchasgovernmentsecurities.Banksdesiringtokeeptheircapitalcostsaslowaspossiblewillmovetowardgovernmentsecuritiesandawayfromcorporateloansandhomemortgageloans。Theywillalsochangethetypesofoff-balancesheetitemstheyholdforthesamereason。15-16. WhatarethemostsignificantdifferencesbetweenBaselIandBaselII?Explaintheimportanceoftheconceptsofinternalriskassessment，VAR，andmarketdisciplineBaselIusedaonesizefitsallapproachtodetermineabank'scapitalrequirements.BaselIIrecognizesthatdifferentbankshavedifferentriskexposuresandshouldbesubjecttodifferentcapitalrequirements。Italsobroadensthetypesofriskconsideredfordeterminingcapitalrequirements，includingcredit，marketandoperationalrisk。InternalriskassessmentreferstoaninnovationinBaselIIwhichallowsbankstomeasuretheirownriskexposure.Thesemeasurementsaresubjecttoreviewbytheregulatorstoensurethattheyarereasonable。TheVARmodelisoneofthemodelsusedtodetermineabank’sriskexposure。Itmeasuresthepriceormarketriskofaportfolioofassetswhosevaluemaydeclineduetoadversemovementsinthefinancialmarketsorinterestrates。Marketdisciplinereferstothemarketdeterminingthebank’sriskexposure。Inordertoachievethatabankwouldberequiredtoissuesubordinateddebt.Sincethisdebtisnotguaranteedthebuyersofthesenoteswouldbeveryvigilantabouttheissuingbank’sfinancialcondition.15—17. Whatstepsshouldbepartofanyplanformeetingalong-rangeneedforcapital？Thefourkeyphasesofplanningtomeetabank’scapitalneedsareasfollows：1。 Developanoverallfinancialplan.2。 Determinetheamountofcapitalthatisappropriategiventhegoals,plannedserviceofferings，acceptableriskexposure,andstateandfederalregulations。3。 Determinehowmuchcapitalcanbegeneratedinternallythroughprofitsretainedinthebusiness。4。 Evaluateandchoosethatsourceofexternalcapitalbestsuitedtotheinstitution’sneedsandgoals.15-18。 Howdoesdividendpolicyaffecttheneedforcapital?Theretentionratioisofgreatimportancetomanagement。Aretentionratiosettoolowresultsinslowergrowthofinternalcapital，whichmayincreasethefailureriskandretardtheexpansionofearningassets。

15—19. WhatistheICGRandwhyisitimportantthemanagementofafinancialfirm？TheICGRindicateshowfastafirmcanallowitsassetstogrowandstillkeepitscapital-to—assetratiofixed。TheICGRindicateshowfastearningsmustgrowandwhatproportionmustberetainedinthebusinesstoinsureaconstantcapital-assetratio。15-20。 Supposethatabankhasarateofreturnonequitycapitalof12percentanditsretentionratiois35percent.Howfastcanthisbank'sassetsgrowwithoutreducingitscurrentratioofcapitaltoassets?Supposethatthebank'searnings(measuredbyROE）dropunexpectedlytoonlytwo-thirdsoftheexpected12percentfigure.Whatwouldhappentothebank'sICGR？Therelevantformulais：ICGR =ROExRetentionRatio=0.12*0.35=0.042or4。2percentIfROEunexpectedlydropstoonlytwo-thirdsoftheexpected12percentfigure,theICGRbecomes:ICGR =[0.12*0.66]＊0.35=0。028or2。8percent.15—21. Whataretheprincipalsourcesofexternalcapitalforafinancialinstitution?Theprincipalsourcesofexternalcapitalare:sellingcommonstock，sellingpreferredstock,issuingcapitalnotes,sellingassets，orleasingcertainfixedassets。15—22。 Whatfactorsshouldmanagementconsiderinchoosingamongthevarioussourcesofexternalcapital？Drawinguponcommonandpreferredstockincreasestheborrowingcapacityandprovidespermanentcapital，butitcanresultinownershipandearningsdilution.Debtcapitalisgenerallycheapertoissueduetotheleveragingeffect,butcreatesgreaterriskofvariabilityinshareholderreturnsandincreasedriskfailure。

Problems15-1。 CarterSavingsAssociationhasforecastthefollowingperformanceratiosfortheyearahead.HowfastcanCarterallowitsassetstogrowwithoutreducingitsratioofequitycapitaltototalassets,assumingitsperformanceholdsreasonablysteadyoveritplanningperiod?ProfitMarginofNetIncome

OverOperatingRevenue8.30％AssetUtilization9。25%EquityMultiplier15.22xNetEarningsRetentionRatio45.00%InternalCapitalGrowthRate= ProfitMargin*AssetUtilization＊EquityMultiplier＊RetentionRatio= 0。0830＊0.0925*15.22＊0。450= 0。0526or5。26％Itsassetscannotgrowanyfasterthan5。26percentinordertoavoidreducingitsratioofequitycapitaltototalassets。15-2. Usingtheformulasdevelopedinthischapterandinchapter6andtheinformationthatfollows，calculatetheratiosoftotalcapitaltototalassetsforthebankingfirmlistedbelow.Whatrelationshipamongtheseinstitution’sreturnonassets,returnonequitycapital，andcapitaltoassetsratiosdidyouobserve？Whatimplicationsorrecommendationswouldyoudrawforthemanagementofeachoftheseinstitutions?NameofBankNetIncome/TotalAssets（ROA)NetIncome/TotalEquityCapital(ROE)FirstNationalBankofHopkins0.0160.15SafetyNationalBank0。0130.13IlsherStateBank0。00950。10MercantileBankandTrustCompany0。00830。09LakesideNationalTrust—0.0043—0。05

ThebasicrelationshipneededinthisproblemisROE=NetIncomeAfterTaxes=NetIncomeAfterTaxes*TotalAssetsEquityCapitalTotalAssetsEquityCapital=ROA*TotalAssetsEquityCapitalinwhichcase：TotalAssets=ROEandEquityCapital=ROAEquityCapitalROATotalAssetsROEThereforetheratiooftotalcapitaltototalassetsforthebanksnamedintheproblemmustbe：FirstNationalBankofHopkins=0.016/0。15=0.1067or10.67%.SafetyNationalBank=0.013/0。13=0。1000or10。00%IlsherStateBank=0.0095/0.100=0.0950or9。50%MercantileBankandTrustCompany=0。0083/0.09=0。0922or9。22%LakesideNationalBank=—0。0043/—0。0500=0。086=8。60％Noneofthebanksappeartohaveaseriouscapitaldeficiencyproblem。However,thebankwiththelowestcapitaltototalassetsratioisalsotheonewithanegativereturnonassetsandreturnonequity。Thenegativeearningsmaybeerodingthecapitalpositionofthisbank.

15-3 UsingthefollowinginformationforSun-UpNationalBank,calculatethatbank'sratiooftotalcapitaltoriskweightedassetsunderthetermsoftheBaselIagreement.Doesthebankhavesufficientcapital?OnBalanceSheetItems(Assets）OffBalanceSheetItemsCash＄3。5millionStandbylettersofcreditbackingmunicipalsandcorporateborrowing＄18。1millionU。STreasurysecurities25.6Longtermbindingcommitmentstocorporatecustomers40。2Depositbalancesduefromotherbanks4.0Totalofalloffbalancesheetitems$58.3millionLoanssecuredbyfirstlinesonresidentialproperty（1—4familydwellings）19.7Loanstocorporations105。3Totalassets$158.1millionTotalcapital$11.8millionSun—UpNationalBank'srequiredlevelofcapitalunderthenewinternationalcapitalstandardswouldbedeterminedfrom:StandbyCreditLetter:＄18.1million*1.00=$18.1millionLong-TermCreditCommitments：$40.2million*0。50=20.1million0%Risk—WeightingCategoryCash ＄3。5millionU。S.TreasurySecurities 25。6million ＄29。1*0=＄0million20%RiskWeightingCategoryBalancesatDomesticBanks $4.0millionCreditEquivalentAmountsof StandbyCredits 18。1million $22.1million＊0.20=$4。42million50％RiskWeightingCategoryResidentialRealEstateLoans ＄19。7millionx0.50=$9.85million

100%RiskWeightingCategoryLoanstoCorporations ＄105.3millionCreditEquivalentsof Long-TermCommitments ＄20。1million ＄125.4million*1.0=＄125.4millionTotalRisk—WeightedAssets $139。67millionThebank'scapitalratiois:TotalCapital/Risk—WeightedAssets =$11.800million=8。45%$139.67millionwhichisjustabovetheminimumtotalcapital(TierOne+TierTwo）requirementof8percent。TopoftheMountainSavingshasbeentoldbyexaminersthatitneedstoraiseanadditional$8millioninlong—termcapital.Itsoutstandingcommonequitysharestotal7。5million,eachbearsaparvalueof$1.Thisthriftinstitutioncurrentlyholdsassetsofnearly$2billion，with＄105millioninequity。Duringthecomingyear,thethrift'seconomisthasforecastoperatingrevenuesof$175million，ofwhichoperatingexpensesare$25millionplus70percentofoperatingrevenue.

Amongtheoptionsforraisingcapitalconsideredbymanagementare：(a）selling＄8millioninnewcommonstock,or320,000sharesat$25pershare;(b)selling$8millioninpreferredstockbearinga9percentannualdividendyieldat＄12pershare;or（c)selling＄8millionworthof10—yearcapitalnoteswitha10percentcouponrate.Whichoptionwouldbeofmostbenefittothestockholders？（Assumea35％taxrate)Whathappensifoperatingrevenueincreasesmorethanexpected（200millionratherthan175million）？Whathappensifthereisaslowerthanexpectedvolumeofrevenues(only$125millioninsteadof$175million).Pleaseexplain.（a)SaleofCommonStockat＄25pershare（b）Saleof9%PreferredStockat＄12pershare(c)Saleof10％CapitalNotesOperatingRevenues$175,000,000$175,000,000$175，000，000OperatingExpenses147,500,000147，500，000147，500,000NetRevenues$27,500，000$27，500,000＄27,500，000InterestonCapitalNotes-——--———--—-——-—-———————800，000Before-TaxIncome＄27，500，000＄27,500,000$26,700，000EstimatedIncomeTaxes9，350，0009，350，0009,078,000After—TaxIncome$18，150,000$18,150，000$17，622，000PreferredStockDividends-——--——-—-—--———--720,000—-———-——-—-—--NetIncomeforCommonStockholders＄18，150,000$17，430，000$17，622，000SharesofCommonStockOutstanding7，820,0007，500,0007,500，000EarningsPerShareofCommonStock$2.32$2。32$2.35InthiscasesaleofthedebtwouldyieldthehighestEPSforthebank’sshareholdersBecauseofthedilutioneffectofissuingstock。

Ifoperatingrevenueroseto＄200millionthesituationwouldbethefollowing：(a)SaleofCommonStockat$25pershare（b）Saleof9%PreferredStockat＄12pershare（c）Saleof10%CapitalNotesOperatingRevenues＄200，000，000＄200,000,000＄200,000,000OperatingExpenses165,000，000165，000，000165,000,000NetRevenues$35,000,000＄35，000,000＄35,000,000InterestonCapitalNotes————————-————--——————————800，000Before—TaxIncome＄35,000,000＄35，000，000＄34，200，000EstimatedIncomeTaxes11,900,00011，900，00011，628,000After-TaxIncome$23，100，000$23,100,000＄22，572，000PreferredStockDividends—--—--———-—-————--—720,000——-————————--———-—-——NetIncomeforCommonStockholders＄23,100，000$22,380，000＄22,572,000SharesofCommonStockOutstanding7，820,0007，500,0007,500，000EarningsPerShareofCommonStock＄2。95$2。98$3。01Andagainthecapitalnoteswouldbethebestoption,althoughthepreferredstockcomescloserthistime。

Ifoperatingrevenuesdropto＄125million，thenthesituationwouldbethefollowing:（a)SaleofCommonStockat$25pershare（b)Saleof9%PreferredStockat＄12pershare（c)Saleof10%CapitalNotesOperatingRevenues$125,000,000$125,000,000$125，000，000OperatingExpenses112,500，000112，500，000112，500,000NetRevenues$12,500，000$12,500,000＄12,500，000InterestonCapitalNotes——-——--—--——-———-———-—--——-—-—--—800，000Before—TaxIncome＄12,500，000＄12,500，000＄11,700，000EstimatedIncomeTaxes4,250，0004,250,0003,978,000After—TaxIncome$8，250,000＄8,250,000＄7,722，000PreferredStockDividends—-——-——--——-———————720，000--—————-—-—-———NetIncomeforCommonStockholders$8,250,000$7，530，000$7，722，000SharesofCommonStockOutstanding7,820，0007，500,0007,500,000EarningsPerShareofCommonStock$1。05$1.00$1。03Inthiscaseissuingthecommonstockisthebestalternativefromthepointofviewofthecommonstockholders。15-5。 PleasecalculateNewRiverNationalBank’stotalriskweightedassets,basedonthefollowingitemsthatthebankreportedonitslatestbalancesheet.Doesthebankappeartohaveacapitaldeficiency？Therisk—weightedassetsofNewRiverNationalBankwouldbecalculatedasfollows：

Off-Balance—SheetItems： StandbyCreditLetters=$95mill。*1.00=＄95mill。Long—TermCorporateCreditCommitments=＄190mill.＊0。50=95mill.On-Balance—SheetItemsandCredit—EquivalentOff-BalanceSheetItems： AssetItems Risk—Weight Cash $95miIl.＊0 = 0 U。S。GovernmentSecurities $320mill.＊0 = 0 DomesticInterbankDeposits $240mill。＊0.20 =48mill. StandbyCreditLetters ＄95mill。*0.20 =19mill。