Problem: National Bank has the following balance sheet (in millions) and has no off-balance-sheet activities.
Assets Liabilities and Equity
Cash $20 Deposits $980
Treasury bills 40 Subordinated debentures 40
Residential mortgage 600 Common Stock 40
Other loans 430 Retained earnings 30
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Total assets $1,090 Total liabilities and equity $1,090
a) What is the leverage ratio?
b) What is the Tier I capital ratio?
c) What is the total risk-based capital ratio?
d) In what capital category would the bank be placed?