Question

The following information is for Wall Street Holdings, the smallest bank holding company in North Dakota. (Bank holding company ID: 1966215. You can look it up at the FDIC.)

Wall Street Holdings, Hamilton, ND
Report of Condition (x$1,000)			Report of Income (x$1,000)
Item	2012	2011	Item	2012	2011
Cash	10,357	10,489	Interest Income	409	391
Securities	3,329	2,671	Interest Expense	21	28
Fed. Funds Sold	3,800	2,500	PLL	0	0
Net Loans	3,717	3,377	Non-Interest Income	32	44
Loan Loss Allowance	103	115	Non-Interest Expense	339	372
All Other Assets	137	107	Earnings Before Taxes	81	35
Total Assets	21,340	19,144	Taxes	12	5
Deposits	18,753	16,732	NI	69	30
Other Liabilities	75	38	Dividends	0	0
Equity	2,512	2,374	Net Charge Offs	12	-2

Based on this information, answer the following questions about Wall Street’s financials.

1. According to asset-based liquidity ratios, Wall Street is:                          [5 pts]

1. Extremely less liquid than a typical bank.
2. Somewhat less liquid than a typical bank.
3. Somewhat more liquid than a typical bank.
4. Extremely more liquid relative to typical banks.

2. What was Wall Street’s Net Overhead Expense Ratio in 2012?                [5 pts]

1. $307 (x$1,000).
2. 0.38%.
3. 1.44%.
4. 1.82%.

3. According to the 2012 Retention Ratio and ROE, what is the internal growth rate of Wall Street’s equity capital (everything based on end-of-year numbers)?          [5 pts]

1. 0.00%
2. 0.32%
3. 2.27%
4. 2.75%

Answer 1

Net OH expense=   a. $ 307*1000
Non-interest expense-Non interest income=
	2012	2011
	339-32=	372-44=
	307	328

Current assets	2012	2011
Cash	10,357	10,489
Securities	3,329	2,671
Fed. Funds Sold	3,800	2,500
Net Loans	3,717	3,377
Total current assets	21,203	19,037
Current liabilities
Deposits	18,753	16,732
Current assets/Current liabilities	1.13	1.14

The Basel III Standards the liquidity coverage ratio requirement for the year 2019 itself is given as 100% .

so, reading from above, 2011 & 2012 ratios, being 1.13 & 1.14 -- are more than 100% , ie. Current liabilities are more than ,fully covered--hence the answer -- d. Extremely more liquid relative to typical banks

According to the 2012 Retention Ratio and ROE, internal growth rate of Wall Street’s equity capital ( based on end-of-year numbers)

ROE*RR

ie. 69/2512*100%

2.75%

Answer: d . 2.75%