Ex11-1: Suppose that a bank faces the following cash inflows and outflows

during the coming week:

(a) deposit withdrawals are expected to total $33 million,

(b) customer loan repayments are expected to amount to $108 million,
(c) operating expenses demanding cash payment will probably approach $51
million,
(d) acceptable new loan requests should reach $294 million,
(e) sales of bank assets are projected to be $18 million,
(f) new deposits should total $670 million,
(g) borrowings from the money market are expected to be about $43 million,
(h) nondeposit service fees should amount to $27 million,
(i) previous bank borrowings totaling $23 million are scheduled to be repaid,
and
(j) a dividend payment to bank stockholders of $140 million is scheduled.

What is this bank’s projected net liquidity position for the coming week?
Ex11-2: Ocean View State Bank estimates that over the
next 24 hours the following cash inflows and outflows will
occur (all figures in millions of dollars):
Deposit withdrawals $100 Sales of bank assets $ 40
Deposit inflows 95 Stockholder dividend payments 150
Revenues from sale of nondeposit
Scheduled loan repayments 90 services 95
Acceptable loan requests 60 Repayments of bank borrowings 60
Borrowings from the money
market 80 Operating expenses 50

What is this bank’s projected net liquidity position in the

next 24 hours?
From what sources can the bank cover its liquidity needs?
Ex11-3: Mountain Top Savings is projecting a net liquidity deficit of $10
million next week partially as a result of :

(a) expected quality loan demand of $32 million,

(b) necessary repayments of previous borrowings of $15 million,
(c) planned stockholder dividend payments of $10 million,
(d) expected deposit inflows of $26 million,
(e) revenues from nondeposit service sales of $18 million,
(f) scheduled repayments of previously made customer loans of $23
million,
(g) asset sales of $10 million, other operating expenses of $15 million, and
(h) money market borrowings of $15 million.

How much must Mountain Top’s expected deposit withdrawals be for the
coming week?
Ex11-4: Suppose that a bank estimates its total
deposits for the next six months in millions of
dollars to be, respectively, $112, $132, $121,
$147, $151, and $139, while its loans (also in
millions of dollars) will total an estimated $87,
$95, $102, $113, $101, and $124, respectively,
over the same six months. Under the sources
and uses of funds approach, when does this
bank face liquidity deficits, if any?
Ex11-5: First National Bank of Belle Mead has forecast its
checkable deposits, time and savings deposits, and
commercial and household loans over the next eight months.
The resulting estimates (in millions) are shown below. Use the
sources and uses of funds approach to indicate which months
are likely to result in liquidity deficits and which in liquidity
surpluses if these forecasts turn out to be true. Explain
carefully what you would do to deal with each month’s
projected liquidity position.
Checkable Time and Commercial
Month Deposits Savings Deposits Loans Consumer Loans

January $120 $550 $650 $160

February 115 500 650 230
March 100 500 700 210
April 90 485 700 175
May 105 465 710 160
June 80 490 700 200
July 90 525 700 175
August 100 515 675 150
Ex11-6: Suppose that a thrift institution’s liquidity
division estimates that it holds $19 million in hot money
deposits and other IOUs against which it will hold an 80
percent liquidity reserve, $54 million in vulnerable funds
against which it plans to hold a 25 percent liquidity
reserve, and $112 million in stable or core funds against
which it will hold a 5 percent liquidity reserve. The thrift
expects its loans to grow 8 percent annually; its loans
currently total $117 million but have recently reached
$132 million. If reserve requirements on liabilities
currently stand at 3 percent, what is this depository
institution’s total liquidity requirement?
Ex11-7: First National Bank posts the following
balance sheet entries on today’s date: Net loans
and leases, $3,502 million; cash and deposits
held at other banks, $633 million; Federal funds
sold, $48 million; U.S. government securities,
$185 million; Federal funds purchased, $62
million; demand deposits, $988 million; time
deposits, $2,627 million; and total assets,
$4,446 million. How many liquidity indicators
can you calculate from these figures?
Ex11-8: XYZ Bank has the following balance sheet (in millions):
Assets Liabilities and Equity
Cash $10 Deposits $95
Loans $75 Borrowed funds $35
Securities$65 Equity $20
Total Assets $150 Total Liab. & Equity $150
XYZ’s largest customer decides to exercise a $15 million loan
commitment. How will the new balance sheet appear if XYZ
uses the following liquidity risk strategies?
• Liability management
• Asset management