Exam 3: Evaluating Bank Performance

The internal performance of a bank encompasses bank planning, technology assessment, and personnel development.

If a bank has a return on assets of 1% and a ratio of equity to assets of 5%, its return on equity will be:

Cash assets include vault cash, deposits at the Federal Reserve, deposits at other banks, and cash items in the process of collection.

The inverse of the ratio of equity to assets is known as the equity or leverage multiplier.

Most securities on the balance sheet of commercial banks are high yielding corporate bonds.

Wages and salaries are the largest noninterest expense item for most banks, and substantially larger than interest expense.

Which of the following accurately describes the other real estate owned that appears as an asset on the bank's balance sheet?

RAROC is an external performance evaluation measure.

All of the following are examples of banking objectives EXCEPT:

The amount in the reserve for loan loss account reflects an estimate by management of probable charge-offs for uncollectible loans and leases.