Calculating ROA, ROE, Net Interest Margin etc from Financial Statements + Replication & Arbitrage Question

Economics

Corporate Finance FIN/571

University of Miami

Question Description

Answer all questions provided. Any information needed to calculate formulas is provided in the financial statements attached.

Calculating ROA, ROE, Net Interest Margin etc from Financial Statements + Replication & Arbitrage Question
attachment_1
Calculating ROA, ROE, Net Interest Margin etc from Financial Statements + Replication & Arbitrage Question
attachment_2

Unformatted Attachment Preview

CONSOLIDATED STATEMENTS OF CONDITION December 31 2018 (Dollars in thousands, except per share amounts) 2017 Assets: Cash and due from banks $ 781,291 $ 639,073 Federal funds sold 237,591 87,364 Securities purchased under agreements to resell (Note 23) 386,443 725,609 1,405,325 1,452,046 Interest-bearing cash 1,277,611 1,185,600 Trading securities 1,448,168 1,416,345 Total cash and cash equivalents Loans held-for-sale (a) Securities available-for-sale (Note 3) 679,149 699,377 4,626,470 5,170,255 10,000 10,000 27,535,532 27,658,929 180,424 189,555 27,355,108 27,469,374 1,432,787 1,386,853 155,034 184,389 38,861 68,693 494,041 532,251 Other real estate owned (“ OREO”) (c) 25,290 43,382 Derivative assets (Note 22) 81,475 81,634 1,802,939 1,723,189 Securities held-to-maturity (Note 3) Loans, net of unearned income (Note 4) (b) Less: Allowance for loan losses (Note 5) Total net loans Goodwill (Note 7) Other intangible assets, net (Note 7) Fixed income receivables Premises and equipment, net (December 31, 2018 and 2017 include $19.6 million and $53.2 million, respectively, classified as held-forsale) (Note 6) Other assets Total assets $ 40,832,258 $ 41,423,388 $ 12,064,072 $ 10,872,665 Liabilities and equity: Deposits: Savings (December 31, 2017 includes $22.6 million classified as held-for-sale) Time deposits, net (December 31, 2017 includes $8.0 million classified as held-for-sale) (Note 8) 4,105,777 3,322,921 Other interest-bearing deposits 8,371,826 8,401,773 24,541,675 22,597,359 Interest-bearing 8,141,317 8,023,003 32,682,992 30,620,362 Federal funds purchased (Note 9) 256,567 399,820 Securities sold under agreements to repurchase (Note 9 and Note 23) 762,592 656,602 Trading liabilities (Note 9) 335,380 638,515 Other short-term borrowings (Note 9) 114,764 2,626,213 1,170,963 1,218,097 9,572 48,996 133,713 85,061 Noninterest-bearing (December 31, 2017 includes $4.8 million classified as held-for-sale) Total deposits Term borrowings (Note 10) Fixed income payables Derivative liabilities (Note 22) 580,335 549,234 36,046,878 36,842,900 95,624 95,624 199,108 204,211 Capital surplus 3,029,425 3,147,613 Undivided profits 1,542,408 1,160,434 Other liabilities Total liabilities Equity: First Horizon National Corporation Shareholders’ Equity: Preferred stock - Series A, non-cumulative perpetual, no par value, liquidation preference of $100,000 per share - (shares authorized - 1,000; shares issued - 1,000 on December 31, 2018 and 2017) (Note 11) Common stock - $.625 par value (shares authorized - 400,000,000; shares issued - 318,573,400 on December 31, 2018 and 326,736,214 on December 31, 2017) Accumulated other comprehensive loss, net (Note 14) Total First Horizon National Corporation Shareholders’ Equity Noncontrolling interest (Note 11) Total equity (376,616) (322,825) 4,489,949 4,285,057 295,431 295,431 4,785,380 4,580,488 $ Total liabilities and equity 40,832,258 $ 41,423,388 See accompanying notes to consolidated financial statements. (a) (b) (c) December 31, 2018 and 2017 include $8.4 million and $11.7 million, respectively, of held-for-sale consumer mortgage loans secured by residential real estate in process of foreclosure. December 31, 2018 and 2017 include $28.6 million and $22.7 million, respectively, of held-to-maturity consumer mortgage loans secured by residential real estate in process of foreclosure. December 31, 2018 and 2017 include $9.7 million and $12.2 million, respectively, of foreclosed residential real estate. 76 CONSOLIDATED STATEMENTS OF INCOME Year Ended December 31 (Dollars and shares in thousands except per share data, unless otherwise noted) 2017 2018 2016 Interest income: Interest and fees on loans Interest on investment securities available-for-sale Interest on investment securities held-to-maturity $ 1,286,470 130,376 $ 816,806 105,019 $ 679,917 96,671 525 591 789 Interest on loans held-for-sale 45,108 17,517 5,506 Interest on trading securities 58,684 34,991 30,779 Interest on other earning assets 24,858 15,006 4,247 1,546,021 989,930 817,909 Total interest income Interest expense: Interest on deposits: Savings 107,748 42,519 19,608 Time deposits 53,096 13,111 10,021 Other interest-bearing deposits 55,707 24,481 10,357 19,359 15,468 15,000 Interest on short-term borrowings 36,747 16,000 4,736 Interest on term borrowings 53,047 36,037 29,103 325,704 147,616 88,825 1,220,317 842,314 729,084 7,000 — 11,000 1,213,317 842,314 718,084 Fixed income 167,882 216,625 268,561 Deposit transactions and cash management Interest on trading liabilities Total interest expense Net interest income Provision/(provision credit) for loan losses Net interest income after provision/(provision credit) for loan losses Noninterest income: 133,281 110,592 108,553 Brokerage, management fees and commissions 54,803 48,514 42,911 Trust services and investment management 29,806 28,420 27,727 Bankcard income 26,718 25,467 24,430 Bank-owned life insurance ("BOLI") 18,955 15,124 14,687 52 483 1,485 212,896 109 Debt securities gains/(losses), net (Note 3 and Note 14) Equity securities gains/(losses), net (Note 3) All other income and commissions (Note 13) (144) 78,395 44,885 64,231 722,788 490,219 552,441 1,936,105 1,332,533 1,270,525 658,223 587,465 563,791 85,009 54,646 50,880 Computer software 60,604 48,234 45,122 Operations services Total noninterest income Adjusted gross income after provision/(provision credit) for loan losses Noninterest expense: Employee compensation, incentives, and benefits Occupancy 56,280 43,823 41,852 Professional fees 45,799 47,929 19,169 Equipment rentals, depreciation, and maintenance 39,132 29,543 27,385 FDIC premium expense 31,642 26,818 21,585 Communications and courier 30,032 17,624 14,265 Amortization of intangible assets 25,855 8,728 5,198 Advertising and public relations 24,752 19,214 21,612 Contract employment and outsourcing 18,522 14,954 10,061 Legal fees 11,149 12,076 21,558 Repurchase and foreclosure provision/(provision credit) All other expense (Note 13) Total noninterest expense Income/(loss) before income taxes (22,527) (32,722) 136,036 135,134 115,448 1,221,996 1,023,661 925,204 714,109 308,872 345,321 (1,039) subsidiary preferred stock Other Balance, December 31, 2018 — (7) 318,573 (11,465) — (133) $ 4,785,380 — — $ 95,624 — (5) $ 199,108 (128) $ 3,029,425 — — — $1,542,408 (11,465) — $ (376,616) — $ 295,431 See accompanying notes to consolidated financial statements. (a) Due to the nature of the preferred stock issued by FHN and its subsidiaries, all components of Other comprehensive income/(loss) have been attributed solely to FHN as the controlling interest holder. (b) 2018 and 2016 include $99.4 million and $93.5 million, respectively, repurchased under share repurchase programs. (c) See Note 2- Acquisitions and Divestitures for additional information. 79 CONSOLIDATED STATEMENTS OF CASH FLOWS First Horizon National Corporation Year Ended December 31 (Dollars in thousands) 2017 2018 2016 Operating Activities Net income/(loss) $ 556,507 $ 176,980 $ 238,511 Adjustments to reconcile net income/(loss) to net cash provided/(used) by operating activities: Provision/(provision credit) for loan losses Provision/(benefit) for deferred income taxes Depreciation and amortization of premises and equipment Amortization of intangible assets 7,000 — 11,000 103,557 121,001 79,604 47,232 34,703 32,387 25,855 8,728 5,198 Net other amortization and accretion (13,962) 27,493 27,088 Net (increase)/decrease in derivatives 41,687 (26,662) 1,886 Fair value adjustment on interest-only strips Repurchase and foreclosure provision/(provision credit) (Gains)/losses and write-downs on OREO, net Litigation and regulatory matters Stock-based compensation expense Gain on sale of held-to-maturity loans Equity securities (gains)/losses, net Debt securities (gains)/losses, net (Gain)/loss on extinguishment of debt Net (gains)/losses on sale/disposal of fixed assets Qualified pension plan contributions (Gain)/loss on BOLI 398 (1,021) — (20,000) (626) (836) 23,171 (3,777) (212,896) (52) 15 (1,320) (61) — (31,400) 8 40,250 13,400 20,627 17,536 — (109) (483) — 144 (1,485) 14,329 — 6,657 3,447 (353) (5,100) (165,000) (4,217) (9,012) (2,010) (2,345,030) (2,001,708) (165,887) 1,780,047 181,136 Loans held-for-sale: Purchases and originations Gross proceeds from settlements and sales (Gain)/loss due to fair value adjustments and other (a) 919,187 19,932 (6,624) (155) 1,356,797 (381,057) (18,050) 29,832 (11,282) 6,249 Net (increase)/decrease in: Trading securities Fixed income receivables Interest receivable Other assets (15,372) (34,352) 1,627 32,950 240,629 (7,921) (303,135) 76,667 (4,171) (39,424) (68,495) (2,070) Net increase/(decrease) in: Trading liabilities Fixed income payables Interest payable 15,165 5,934 (4,535) Other liabilities (3,980) (16,877) (36,546) (322,202) (205,778) (58,520) 234,305 (28,798) 179,991 Total adjustments Net cash provided/(used) by operating activities Investing Activities Available-for-sale securities: Sales 20,751 936,958 444,222 Maturities 675,526 583,014 736,956 Purchases (473,205) (1,558,990) (1,239,912) Held-to-maturity securities: Prepayments and maturities — 4,740 — 30,464 3,416 11,396 (47,986) (53,046) (62,554) Premises and equipment: Sales Purchases Proceeds from sale of Visa Class B shares 240,206 — — Proceeds from sales of OREO 30,824 13,468 27,135 Proceeds from sales of loans classified as held-to-maturity 50,498 — — Proceeds from BOLI 12,860 11,440 2,740 105,267 (808,399) Net (increase)/decrease in: Loans (b) Interests retained from securitizations classified as trading securities 800 Interest-bearing cash (92,011) Cash paid related to divestitures (27,599) 80 865 (121,434) — (1,931,026) 2,429 (457,198) — ...
Student has agreed that all tutoring, explanations, and answers provided by the tutor will be used to help in the learning process and in accordance with Studypool's honor code & terms of service.

This question has not been answered.

Create a free account to get help with this and any other question!

Similar Questions
Related Tags