Please calculate: ROE ROA Net interest margin Earnings per share Net noninterest margin Net operating margin Alternative Scenarios: a. Suppose interest income, interest expenses, noninterest income, and noninterest expenses each increase by 3 percent while all other revenue and expense items shown in the preceding table remain unchanged. What will happen to Rainbow ROE, ROA, and earnings per share? b. On the other hand, suppose Rainbow interest income and expenses as well as its noninterest income and expenses decline by 3 percent, again with all other factors held constant. How would the bank’s ROE, ROA, and per-share earnings change?
The following information is for Rainbow National Bank:
Interest income $2,250.00
Interest expense 1,500.00
Total assets 45,000.00
Securities losses or gains 21.00
Earning assets 40,000.00
Total liabilities 38,000.00
Taxes paid 16.00
Shares of common stock outstanding 5,000
Noninterest income $800.00
Noninterest expense 900.00
Provision for loan losses 250.00
Please calculate:
ROE
ROA
Net interest margin
Earnings per share
Net noninterest margin
Net operating margin
Alternative Scenarios:
a. Suppose interest income, interest expenses, noninterest income, and noninterest expenses
each increase by 3 percent while all other revenue and expense items shown in the preceding
table remain unchanged. What will happen to Rainbow ROE, ROA, and earnings per share?
b. On the other hand, suppose Rainbow interest income and expenses as well as its
noninterest income and expenses decline by 3 percent, again with all other factors held constant.
How would the bank’s ROE, ROA, and per-share earnings change?
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