Federal Finance Bank
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CASE-75M Student Version 12/9/2010
Federal Finance Bank
Going Public
Note: Only questions 1, 2, 5, 6, 7, 8 and 9 are addressed.
This model was developed using Microsoft Excel 5.0 for windows.
If you are using the student version of the model, some of the cells have been blanked out.
Before using the model, it is necessary to fill in the empty cells with the appropriate formulas.
Once this is done, the model is ready for use.
The following cells have been blanked out:
D21, D22, D47, D48, D89, E90, F88, F91, C107, C112, C116, D119, E117, F119, C123, C133, C142, D145
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INPUT DATA: OUTPUT DATA:
Amount Needed to Raise Return on Assets 1.50%
Floatation Costs Original Share Price #DIV/0!
# shares to raise capital (@$20) 0
Stock Offer Price $20.00 Net per share $20.00
Market Value/Book Value Ratio 1.15 Capital Asset Ratio 5.04%
Risk Based Capital Asset Ratio 0.00%
(Dollars in thousands) Annual Growth in Assets 0.00%
ASSETS
Cash $7,387
U.S. Treasuries 12,477
Mortgage-backed Securities 110,684
Municipal Bonds 25,970
Government Agency Securities 34,740
TOTAL CASH & SECURITIES $191,258
Residential Mortgage Loans $189,164
Consumer Loans 36,583
Business Loans 77,693
TOTAL LOANS $303,440
Fixed Assets $31,128
TOTAL ASSETS $525,826
LIABILITIES
Passbook Savings $58,693
Non-interest Checking
N.O.W. Accounts
Money Market Accounts 115,268
Certificate of Deposits 185,561
TOTAL SAVINGS $359,522
Borrowed Money $68,701
Other Liabilities 23,878
TOTAL LIABILITIES $452,101
Capital Stock ($100 par value) $12,155
Retained Earnings 14,335
TOTAL EQUITY $26,490
TOTAL CLAIMS $478,591
Loan Loss Reserve Allow. $2,680
Risk Adjustment Weights:
No default risk 0%
Low default risk 20%
Residential loans & muni. bonds 50%
Other assets 100%
Year Net Profit Assets
(thousands) (thousands)
2000 $7,863 $525,826
1999 $6,732 $461,119
1998 $5,959 $402,667
1997 $5,450 $360,954
1996 $4,745 $312,172
1995 $4,077 $273,617
Data on Publicly Traded Banks:
Assets Equity Book Value Price Net Profit Assets 1995
(thousands) (thousands) per Share (thousands) (thousands)
Maryland Financial $220,000 $11,800 $31.35 $3,322 $109,400
Great Northern Bank 486,000 21.08 20.84 6,172 241,600
First Bank of California 305,000 15,400 36.54 2,745 239,000
Omaha Federal 238,000 12,900 25.75 3,546 123,609
Owner % Owned
Brown 33%
Zudlum 31%
Jones 20%
Others 16%
= = = = = = = =
MODEL GENERATED DATA:
KEY RATIOS:
Capital Asset Ratio 5.04%
Total Capital ($1,000)
Risk Adj. Asset Value ($1,000) $274,265
Risk Based Capital Ratio 0.00%
Return on Assets 1.50%
Asset (1995-2000) growth
Capital Asset Asset Growth ROA Market Val/
Ratio Rate Ratio Book Val Ratio
Maryland Financial 15.00% 1.51% 0.000
Great Northern Bank 0.00% 15.00% 0.989
Bank of California 5.05% 5.00% 0.90% #DIV/0!
Omaha Federal 5.42% 1.49%
Federal Finance 5.04% 0.00% 1.50%
Original # shares
Book Value per share #DIV/0!
Market Value per Share #DIV/0!
Size of Stock Split #DIV/0!
Necessary
Post split # shares
Net per share $20.00
New # shares need 0
% Owned # Shares Owned
Brown 33% 0
Zudlum 31%
Jones 20% 0
$ raised in offering of 1/2 of Zudlum's stock
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Solution Summary
The posting has the solution to questions 1,2,5,6,7,8 and 9 for Federal Finance Bank case.
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