Onshore Bank has $35 million in assets, with risk-adjusted assets of $25 million. Core Equity Tier 1 (CET1) capital is $1,200,000, additional Tier I capital is $420,000, and Tier II capital is $430,000. The current value of the CET1 ratio is 4.8 percent, the Tier I ratio is 6.48 percent, and the total capital ratio is 8.2 percent.
Calculate the new value of CET1, Tier I, and total capital ratios for the following transactions:
a. The bank issues $3.5 million of CDs and uses the proceeds to issue category 1 mortgage loans with a loan-to-value ratio of 70 percent.