Two depository institutions have composite CAMELS ratings of 1 or 2 and are "well capitalized." Thus, each institution falls into the FDIC Risk Category I deposit insurance assessment scheme. Weights for the CAMELS components to calculate the weighted average CAMELS rating are 25 percent, 20 percent, 25 percent, 10 percent, 10 percent, and 10 percent for the C, A, M, E, L, and S components, respectively. Further, the institutions have the following financial ratios and CAMELS ratings: Institution A Institution B Financial Ratios: Leverage Ratio 8.64 7.77 Nonperforming Loans and Leases/Gross 0.37 0.52 Assets Other Real Estate Owned/Gross Assets 0.50 0.54 Net Income Before Taxes/Total Assets 2.17 1.95 Brokered Deposit Ratio 1.35 3.45 One-Year Asset Growth 5.90 7.05 Loans as a Percent of Total Assets: Construction & Development 0.42 0.32 Commercial & Industrial 11.96 15.30 Leases 1.25 0.95 Other Consumer 17.25 16.95 Loans to Foreign Government 0.10 0.50 Real Estate Loans Residual 0.00 0.00 Multifamily Residential 0.60 1.15 Nonfarm Nonresidential 0.00 0.00 1-4 Family Residential 39.93 39.15 Loans to Depository Banks 0.30 2.50 Agricultural Real Estate 4.05 1.00 Agriculture 6.60 0.80 CAMELS components: C A M E L S 122222 2 2 2 2 1 2 Calculate the initial deposit insurance assessment rate for each institution. (Do not round intermediate calculations. Round your answers to 3 decimal places. (e.g., 32.161)) Initial assessment rate Institution A Institution B
Two depository institutions have composite CAMELS ratings of 1 or 2 and are "well capitalized." Thus, each institution falls into the FDIC Risk Category I deposit insurance assessment scheme. Weights for the CAMELS components to calculate the weighted average CAMELS rating are 25 percent, 20 percent, 25 percent, 10 percent, 10 percent, and 10 percent for the C, A, M, E, L, and S components, respectively. Further, the institutions have the following financial ratios and CAMELS ratings: Institution A Institution B Financial Ratios: Leverage Ratio 8.64 7.77 Nonperforming Loans and Leases/Gross 0.37 0.52 Assets Other Real Estate Owned/Gross Assets 0.50 0.54 Net Income Before Taxes/Total Assets 2.17 1.95 Brokered Deposit Ratio 1.35 3.45 One-Year Asset Growth 5.90 7.05 Loans as a Percent of Total Assets: Construction & Development 0.42 0.32 Commercial & Industrial 11.96 15.30 Leases 1.25 0.95 Other Consumer 17.25 16.95 Loans to Foreign Government 0.10 0.50 Real Estate Loans Residual 0.00 0.00 Multifamily Residential 0.60 1.15 Nonfarm Nonresidential 0.00 0.00 1-4 Family Residential 39.93 39.15 Loans to Depository Banks 0.30 2.50 Agricultural Real Estate 4.05 1.00 Agriculture 6.60 0.80 CAMELS components: C A M E L S 122222 2 2 2 2 1 2 Calculate the initial deposit insurance assessment rate for each institution. (Do not round intermediate calculations. Round your answers to 3 decimal places. (e.g., 32.161)) Initial assessment rate Institution A Institution B
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:Two depository institutions have composite CAMELS ratings of 1 or 2 and are "well capitalized." Thus, each institution falls into the
FDIC Risk Category I deposit insurance assessment scheme. Weights for the CAMELS components to calculate the weighted average
CAMELS rating are 25 percent, 20 percent, 25 percent, 10 percent, 10 percent, and 10 percent for the C, A, M, E, L, and S components,
respectively. Further, the institutions have the following financial ratios and CAMELS ratings:
Institution A
Institution B
Financial Ratios:
Leverage Ratio
8.64
7.77
Nonperforming Loans and Leases/Gross
0.37
0.52
Assets
Other Real Estate Owned/Gross Assets
0.50
0.54
Net Income Before Taxes/Total Assets
2.17
1.95
Brokered Deposit Ratio
1.35
3.45
One-Year Asset Growth
5.90
7.05
Loans as a Percent of Total Assets:
Construction & Development
0.42
0.32
Commercial & Industrial
11.96
15.30
Leases
1.25
0.95
Other Consumer
17.25
16.95
Loans to Foreign Government
0.10
0.50
Real Estate Loans Residual
0.00
0.00
Multifamily Residential
0.60
1.15
Nonfarm Nonresidential
0.00
0.00
1-4 Family Residential
39.93
39.15
Loans to Depository Banks
0.30
2.50
Agricultural Real Estate
4.05
1.00
Agriculture
6.60
0.80
CAMELS components:
C
A
M
E
L
S
122222
2
2
2
2
1
2
Calculate the initial deposit insurance assessment rate for each institution. (Do not round intermediate calculations. Round your
answers to 3 decimal places. (e.g., 32.161))
Initial assessment rate
Institution A
Institution B
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