This workout asks us to use the information below and calculate the bank's CET1, Tier 1, and Tier 2 capital, and capital ratios, and the leverage ratio. We've got total shareholders' equity. We've then got goodwill and other intangibles shown as negatives, and then other eligible for common equity Tier 1 or CET1.

Next, we've got qualifying preferred stock, NCI that's eligible for Tier 1 capital, and other eligible items for Tier 1 capital.

We've then got the eligible portion of allowance for credit losses and subordinated debt.

We're going to use this information to calculate the different tiers of capital, and then to calculate the ratios we need information on the assets, which we've got. We've got total assets and risk-weighted assets.

Let's calculate common equity Tier 1 or CET1 first. To do that, we're going to go pick up the total shareholders' equity balance. I'm then going to add all of these items below, starting from goodwill and other intangibles. You can see those are being shown as negative, so in effect, we are subtracting them from the shareholders' equity, and then we're going to add in the other instruments eligible for CET1.

Now let's calculate Tier 1 capital.

We're going to start with the CET1 capital we've just calculated and add to that the sum of any other instruments that are classified as Tier 1 capital. So that's our qualifying preferred stock, the NCI, and other.

To calculate Tier 2 capital, that is the sum of the eligible portion of allowance for credit losses and the subordinated debt.

And then finally, total capital will be the Tier 1 capital plus the Tier 2 capital, and that should reconcile to the shareholders' equity plus all the items below. So let's just check that for 2024.

If I take the total of all of these items, that gives us 64,375, which is what we have just calculated.

Now, to calculate the different ratios, all we need to do is express the different tiers of capital relative to the risk-weighted assets of the bank.

So for CET1 ratio, we pick up the CET1 capital, and we divide that by the risk-weighted assets.

For the Tier 1 ratio, we do exactly the same thing, except we're picking up Tier 1 capital and expressing that relative to risk-weighted assets, and finally, total capital.

And if we copy that to the right, we've got our calculations for both years.

Finally, to calculate the leverage ratio, we need to take the Tier 1 capital, and instead of expressing that relative to the risk-weighted assets only, we're going to express that relative to the total assets.

And that gives us a leverage ratio of 8.1% for 2024 and 7.9% for 2023.