Please calculate New River National Bank’s total risk weighted assets, based on the following items that the bank reported on its latest balance sheet. Does the bank appear to have a capital deficiency?

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Cash	$115 million
Domestic interbank deposi ts	130 million
U.S. government securities	250 million
Residential real estate loans	450 million
Commercial loans	520 million
Total assets	$1,465 million
Total liabilities	$1,350 million
Total capi tal	$115 million

Off-balance-sheet items include

Standby credi t letters that back munici pal
general obligation bonds	$ 87 million
Long-term unused loan commitments to
private companies	145 million

The risk-weighted assets of New River National Bank would be calculated as follows:

Off-Balance-Sheet Items:

Standby credit letters = $87 mill. * 1.00 = $87 million

Long-term corporate credit commitments = $145 mill. * 0.50 = $72.5 mill.

On-Balance-Sheet Items and Credit-Equivalent Off-Balance Sheet Items:

Asset Items	Risk-Weight
Cash	$115 miIl. * 0 = 0
U.S. government securities	$250 mill. * 0 = 0
Domestic interbank deposits	$130 mill. * 0.20 = 26 mill.
Standby credit letters	$87 mill. * 0.20 = 17.4 mill.
Residential real estate loans	$450 mill. * 0.50 = 225 mill.
Commercial loans	$520 mill. * 1.00 = 520 mill.
Long-Term corporate credit
commitments	$72.5 mill. * 1.00 = 72.5 mill.
Total Risk-Weighted Assets	= $860.9 mill.

New River's overall capital-to-assets ratio is:

[latex]\frac{ ext { Total Capital }}{ ext { Total Risk-Weighted Assets }}=\frac{\$ 115 ext { million }}{\$ 860.9 ext { million }}=\quad 0.1336 ext { or } 13.36 ext { percent }[/latex]

Overall, it does not appear from the information given above that New River has a capital deficiency.

Question 15.P.5: Please calculate New River National Bank’s total risk weight...

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