Homework answers / question archive / Oldhat Financial started its first day of operations with $8 million in capital

Oldhat Financial started its first day of operations with $8 million in capital

Accounting

Share With

Oldhat Financial started its first day of operations with $8 million in capital. A total of $140 million in chequable deposits is received. The bank makes a $30 million commercial loan and another $60 million in mortgages with the following terms: 200 standard 30-year, fixed-rate mortgages with a nominal annual rate of 5.25%, each for $300,000. Assume that desired reserves are 8%. The bank's balance sheet is shown below: Assets Desired reserves $11 Excess reserves $47 Loans $90 million million million Liabilities Chequable deposits Bank capital $140 million $8 million Early the next day the bank invests $30 million of its excess reserves in commercial loans. Later that day, terrible news hits the mortgage markets, and mortgage rates jump to 13%, implying a present value of Olfhat's current mortgage holdings of $149,758 per mortgage. Bank regulators force Oldhat to sell its mortgages to recognize the fair market value. What does Oldhat's balance sheet look like? Fill in the blanks in the actual balance sheet as it would look after the sale: (Round your responses to the nearest whole number. Use a minus sign to enter negative numbers.) Assets Liabilities Desired reserves $ million Chequable deposits million Excess reserves $ million Bank capital $ million Loans $ million $ $ How do these events affect its capital position? The bank is now