The financial statements for First National Bank (FNB) are shown below:
a. Calculate the dollar value of FNB's earning assets.
b. Calculate FNB'S ROA. (Round your answer to 2 decimal places. (e.g., 32.16))
c. Calculate FNB's asset utilization ratio. (Round your answer to 2 decimal places. (e.g., 32.16))
d. Calculate FNB's spread. (Round your answer to 2 decimal places. (e.g., 32.16))
Solution :-
(A) FNB's Earning Assets = Investment Securities + Net Loans = $4300 + $2175 + $16025 - ($1625) = $20875
(B) FNB's Return on Assets = $390 / $24910 = 1.566%
Return = ( Intt Income + Non Intt Income - Intt Exp - Non Intt Exp - Loan Losses - Taxes ) = $2850 + $190 - $1860 - $470 - $230 - $90 = $390
Total Assets = $24910
(C)
FNB's Assets Utilisation Ratio = (Intt Income + Non Intt Income) / Total Assets = ($2850 + $190) / $24910 = 12.21%
(D) FNB's Spread = (Intt Income / Earning assets) - ( Intt Exps / [Deposits + CD + Equity] )
= ($2850 / $24910) - ($1860 / [$11300 + $3450 + $2450] ) = 11.44% - 10.814% = 0.6272%
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