Question

It is relatively easy to find up-to-date information on banks because of their extensive reporting requirements. Go to http://www2.fdic.gov/qbp/, where you will find summary data on financial institutions. This site is sponsored by the Federal Deposit Insurance Corporation. Click on “Quarterly Banking Profile,” select the most recent quarter and access QBP, click on “Complete QBP” and scroll to Table I-A.

a. Have banks’ returns on assets been increasing or decreasing over the past few years?

b. Has the core capital been increasing, and how does it compare to the capital ratio reported in Table 1 of the text?

c. How many institutions are currently reporting to the FDIC?

Short answer

(a) The banks returns on assets has decreased.

(b) The bank's core capital has increased, and it has been steadily increasing since 2011.

(c) 5670 institutions.

Step-by-step solution

Step 1. (a) Introduction

The Federal Deposit Insurance Corporation (FDIC) is an independent organisation established by Congress to ensure the financial system's stability and public confidence. It protects deposits, evaluates and supervises financial institutions for safety, soundness, and consumer protection, and manages receiverships for large and complicated financial institutions.

Step 2. Explanation

The bank's return on assets has fallen. In 2017, the return on assets was 0.97 percent, down from 1.04 percent in 2016. The return on assets has dropped significantly. The drop in income and return on assets is due to the implementation of the New Tax Law.

Step 3. (b) Explanation

The bank's core capital has increased, and it has been steadily increasing since 2011. The current core capital is 9.62 percent, compared to a core capital of 9.07 percent in 2011. The core capital of a company is lower than the capital of a bank. The core capital in the FDIC's (Federal Deposit Insurance Corporation) quarterly banking report (Table 1A) is 9.62 percent, whereas bank capital (Table 1 in the book) is 11 percent.

Step 4. (c) Explanation

The Federal Deposit Insurance Corporation now insures 5670 institutions (FDIC). The Federal Deposit Insurance Corporation (FDIC) is an independent organisation established by Congress to ensure the financial system's stability and public confidence. It protects deposits, evaluates and supervises financial institutions for safety, soundness, and consumer protection, and manages receiverships for large and complicated financial institutions.